How to switch your business bank account

How to switch your business bank account image

Is it time to switch business bank accounts? Not sure where to start? Then read on. We’ve compiled this guide to help you with all considerations and explain the switching process as simple as possible.

Switching your business bank account is one of those things we know we should do, but the hassle of it all makes it slip down our to-do list. Well, if you like saving money and finding the best deal, then it's time to dive into the deep end and begin. As a nation, we’re creatures of habit, and we don't like change. This makes us reluctant to switch banks, whether that's for our personal or business use.

A recent BBC report found that only 3% of people who hold a current account had switched in the previous year. With business account moves just making up 4% annually. When customers shop around and switch, they force the industry to become more competitive, meaning the more people who switch, the more people save.

Why do I need to switch?

Research has shown that most small businesses are not happy with the business-related fees that their bank currently charges. Being in business is tough, especially for a small business so that any extra charges can hit a smaller company harder than most.

Before 2003 banks were allowed to charge business owners for everything they did with their business account, so customers just accepted the fact that having a business account was going to cost them. However, despite new rules being introduced to help small business owners, most are still finding it tough.

Business Bank Account Switch Deals

The days of being loyal to your bank are over. You're unlikely to be treated better than a new customer, and they tend to keep the best deals to entice new people to join. Maybe there's a loan with a better interest rate at another bank you've seen, but you're afraid of switching or don't want the hassle.

Or other banks are offering free services like secure internet banking and fee-free transactions. The banks love it when we get lazy and don't look elsewhere, it makes them money but where does that leave us? If there's money to be saved, then you'll want to make the switch.

Most UK banks will fall over themselves to get small businesses to take an account with them, but you've got to take the time to do your research, compare all accounts, find out what you need and see which bank can offer you the best deal. Do the leg work now, and it will help your business tenfold in the long run.

Many banks will always have enticing offers for a small business just starting but don't just sign up for the first one you come across. You want to make sure that they're doing something different than your current bank. You don't want to jump ship to find out that they also have bad customer service or poor internet banking. So, take your time and get as much information as possible.

Things you need to consider:

  • What overdraft limits are available to you?
  • How much will you be charged for going into your overdraft?
  • What's the interest rate paid compared to your current bank?
  • Do they have an attractive loan offer for small businesses?
  • Do they have a transaction fee?
  • Do they have a fee-free period when you join?
  • Do you have free access to your money from other banks ATM?
  • Is there a branch close to your business? And does it offer all the services?
  • Are you in a remote location? If so, does your bank have an outreach programme? Or are they partnered with your local post office where you can do your banking?
  • Does the Financial Ombudsman fully regulate the bank?
  • Are there phone lines always on hold? Or do you get to talk to an actual person within a few minutes of waiting?
  • Do they have a great working app meaning you can do a lot of your banking straight from your phone?
  • Is your deposited money protected by the Financial Services Compensation Scheme (FSCS)?

Where do you even start?

Most businesses find that they stick with the same bank which they hold their account with. This mentality is excellent for banks but not so great for the customers. When your business is in full swing, the last thing you want is for something to disrupt it like switching banks, but it's much more straightforward than you think.

Switching while your business is growing can be advantageous, but most of the time it's looked over because you're so busy with the actual running of the business. Who has time to be researching, hours on hold to the bank plus the actual switching process? Well, forget this old, by-gone belief, banking has changed and they've made it easier for small businesses to make the switch.

Guidelines published by the Department of Trade and Industry (DTI), now the Department for Business, Enterprise and Regulatory Reform (BERR) sited that banks are no longer allowed to drag their feet when closing down a customer account and switching them to a new one with a different bank.

They have a set period to close, transfer standing orders and direct debits plus any other arrangements over to the new account. So if you're worried about it being a lengthy process, legally, it's not allowed to be.

As well as this, most banks are now signed up to the voluntary Business Banking Code, which means your previous bank must inform your new bank of any direct debits or standing orders within three business days as well as provide a credit history and transfer the account in seven business days. The code also demands that banks must waiver any charges incurred due to a mistake or delay when switching accounts. So you'll never owe money if it wasn't your fault.

Review your current banking situation.

Sticking with your current bank just because you've never had any issues with them is a nice thought but not one that saves you money. By reviewing your situation, it helps you see what you need and what you don't need from your account.

You could be paying for things that you don't even use. This helps you determine what you're looking for and which other banks could offer you a better deal. You'll need to figure out what type of account will be most beneficial for your business.

Which business account should I choose?

Begin by finding out which different accounts are on offer to you. You'll then want to decide what's essential to your business and who can offer the best deal to you. Think about your needs and the needs of your business.

Do you need a lengthy fee-free period? Or maybe you're looking for a seamless online banking experience? Write a list of pros and cons of your current account and this should help you find out exactly what you need.

Look for Free Banking

Essentially, this means a bank will offer you a fee-free period if you switch over to them. A new customer will receive, on average, 12 to 18 months of free transactions before they start charging you to use their services.

This is a significant advantage when switching banks and it's not hard to find this kind of deal, with banks vying for new customers all the time. If you're a business with a high transaction rate, this kind of account could be perfect for you.

It can be easy to choose the bank offering the longest fee-free term but do your research first. That same bank may charge astronomical fees once your free period is up, so find the bank who offers a fair introductory period and reasonable charges after it ends. Some banks allow you to calculate and estimate how much your account will cost you after your free banking period. Making it much easier to see if it's going to be worth it for you.

Look for favourable Overdraft limits

It's not uncommon for a business to need a great overdraft limit especially when you need to get your hands on short term funding. So, having an overdraft is something you'll want to have if this is a particular need of your business.

When managing cash flow, overdrafts are worth their weight in gold but remember that you'll need to take interest rates and arrangement charges into consideration when looking for a new bank account. Another thing to consider is if your business needs change and you need to negotiate your overdraft limit. Find out if the bank offers flexibility to increase or lower the limit in the future. You don't want to be caught out with nasty small print charges when you're already 18 months in.

If you've never negotiated an overdraft limit before, you'll want to be prepared, so you get the best deal for your business.

1. Justify why you need access to short-term funds. The more information the bank has, the more likely they'll be able to offer you a deal that works for both parties.

2. Clearly explain how you'll be repaying the funds. The bank needs good clarification that it will get its money back without having to chase you for it.

3. Ask for a secured overdraft. If you're in a position to offer personal assets such as your house or car to secure the overdraft, then opt for that. In most cases, interest rates tend to be lower for overdrafts that are secured. However, please always remember if you fall on your repayments, you could be at risk of losing your assets.

Great Customer Service

If you need a more personalised approach and excellent customer service is important to you then you'll want to find out if the bank you're looking at offers dedicated account managers. Some banks offer specialist advisors who work with you on a one to one basis.

They're usually really knowledgeable and can help you when it comes to business planning, managing your account correctly and even investment services.

In most cases they can also help connect you to relevant people in your area, helping you network and get the most out of your business. If you're looking for a person with expertise and who you can occasionally bounce ideas off and get some real advice from, check out the banks' customer service extras.

Building this type of relationship can be so beneficial for your business. Lots of companies pass up this opportunity thinking they don't need it, but it can come in handy when you need to expand your knowledge in an area that you aren't too familiar.

Add-ons and Extra Perks

If you're looking for additional services that compliment your business then researching the extra add ons and perks that a bank may offer is paramount. Maybe your company deals with a lot of trading abroad, so you'll want to find an account that gives you free currency exchange. Being able to move money without any annoying charges could save you a great deal of cash in the long run.

Or maybe you need access to higher ATM withdrawal limits if you're a business who needs a lot of petty cash. Lots of banks now offer free text and email alerts to help you manage your money correctly and escape any late fee payments on your account, which is great if you need a little reminder from time to time.

There's plenty of additional services that banks now provide so if there's something particular that you need, get in touch with the bank and find out if they can offer it to you.

Remember, you want to be crystal clear on what the bank offers after your 'new customer' period too. So always be on the lookout for the small print or ask them directly what happens after that period ends.

Switching business bank account offers

So, you've decided what kind of account you need now it's time to compare what's on the market right now - using a comparison engine to see if you can pick up any helpful tips and tricks for getting the best Business Bank Account Switch Deals for your business. Lots of banks also offer to review your account with them every year to ensure that you're on the best tariff.

How do I switch my business bank account?

Now, you've chosen the account you want to open, and the realisation of switching hits you. Will it be long and lengthy? Will switching interrupt my current cash flow? What about my credit score or appearance of my financial stability? Should I stick with my existing account? It's normal to be a little apprehensive; you're a business owner, when are you not stressed? Banks are making switching much more streamlined and straightforward. The switch won't interrupt business activity, neither will it mess with existing direct debits or standing orders so you can go ahead and breathe a sigh of relief.

There is one way to eliminate all the hassle by using the government service - Current Account Switch Service. They created this to help small businesses and make the process of switching accounts more accessible than ever. It's a free service (I know!) allowing businesses with less than 50 employees and an annual turnover of under £6.5 million to switch accounts seamlessly. The move only takes seven business days with your outgoing payments, direct debits and standing orders all being transferred together. It really couldn't be more simple.

When you use the current account switch service your switch is guaranteed, and it covers 99% of UK current accounts. What's great about this is, any missed payments or fees incurred because of the switch, will be reimbursed. That's one less thing you have to worry about!

However, bear in mind that you can't switch a savings account, any ISAs, non-sterling payment accounts or a joint account without the permission of both parties.

How do I prepare to switch my business bank account?

So, it's time to get ready for the switch. There are a few things you'll want to prepare to make sure the transition is as smooth as possible. If you've opted to use the Current Account Switch Service, you'll want to check that your bank or building society is partnered with the service. Then, it's time to prepare your paperwork. The more you do, the easier the switch will be. All relevant security checks will be made before the account can be opened, so this is what you'll need to sail through those checks:

  • The name of your business or charity
  • Your trading address
  • What funding you require
  • Your companies house registration number
  • Your HM Revenue & customs certificate
  • A recent utility bill or statement relating to your business

Also, directors and business partners could be asked for personal information to complete the security checks. This may include copies of your passport, drivers license or recent bank statement. Being prepared here makes the rest of the process a reasonably easy one.

So, you've got your documentation ready; you can now contact the bank and start the process. They'll first check that you're eligible to open an account with them and once all the relevant security checks have been done and everything is squeaky clean, you'll be able to select your 'switching over' date. You'll also be able to continue to use services on your current account without any interruption (until your switch day).

What happens on the actual switch day?

Switch day arrives! You'll now be able to start using your shiny brand new account right away. Plus, any payments that were made into your old account after you switched over will automatically be deposited into your new account, with the person paying you being notified of your new bank details for future payments. Apart from that, the seven business days usually pass by without a hitch, and you'll be wondering why you thought it was such a hassle in the first place!

Things you'll need to do over the switching period:

All your invoices will need to be updated with accurate information so it can be linked to your new account.

Any third parties who have been given permission to make payments on your behalf will need to be informed of your new bank account details.

Remember, you won't be able to add any new direct debits or standing orders whilst the switch is in progress.

Need more guidance?

Seek out a good accountant or if you already have one, ask for their advice. They have a wealth of knowledge on this type of stuff and usually know what they're talking about.

Switching your business account may sound daunting at first and you've probably been avoiding it like the plague. It's totally understandable when banks used to make it so hard but times have changed. The power is back in the hands of the small business owner. Banks now understand how valuable you are to their business and the more you flex your switching muscles, the more competitive the market becomes.

Banking is moving with the times which means you should too. It's going to get easier to manage the money coming in and out of your business. Banking shouldn't be something that adds to your stress. With banks competing for your attention, services are getting much better and what they can offer you is becoming greater year on year. So make switching a priority on your to-do list.

So, get started today because no one ever regrets saving money.

Compare business current accounts

We have listed some business current accounts with their initial monthly fee; please note that providers may charge additional fees. You can also use our business bank account comparison tool here.

Bank Account Fee
Clydesdale Business Current Account Clydesdale Business Current Account £5 per month
Yorkshire Bank Business Current Account Yorkshire Bank Business Current Account £5 per month
Tide Business Bank Account Tide Business Bank Account No Fee
Santander Business Current Account Santander Business Current Account £5 to £7.50 per month
Anna Business Current Account Anna Business Current Account £11 per month
Card One Banking Business Current Account Card One Banking Business Current Account £12.50 per month
Acorn Account Business Current Account Acorn Account Business Current Account £12.50 per month
Cashplus Business Current Account Cashplus Business Current Account £69 per month
Countingup Business Current Account Countingup Business Current Account Free to £4.95 per month
Metro Bank Business Current Account Metro Bank Business Current Account £5 per month
HSBC Bank Business Current Account HSBC Bank Business Current Account £5.50 per month
Barclays Bank Business Current Account Barclays Bank Business Current Account £6 per month
Natwest Bank Business Current Account Natwest Bank Business Current Account £6 per month
Lloyds Bank Business Current Account Lloyds Bank Business Current Account £6.50 per month
Monzo Business Current Account Monzo Business Current Account - Join the waiting list. £TBC per month


This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. When making financial decisions, it is important to seek appropriate financial advice.