How to switch your business bank account

There are many reasons you may have outgrown your current banking partner. You may want quicker or more flexible customer service, or to shop the market for lower fees, or to upgrade your current features and cash management strategies. Perhaps you’re looking to upgrade security, manage bank risk, and ensure all your funds are safeguarded against the unexpected. Like a once-beloved garment that no longer fits, a bank that no longer suits your needs can become more of a hindrance than a source of confidence.

As your business evolves, it’s important to reassess the value your bank provides to ensure your startup has every tool it needs to succeed. Here, we’ll walk you through how to evaluate when it’s time to make a switch, what to look for in a new business bank account, and how to navigate the move smoothly.

When should you consider switching bank accounts?

Just like deciding when to go to market with your product, for instance, timing is also key when it comes to switching your business bank account.

Here are a few reasons to start exploring other business banking options:

Fees are starting to stack up

As your startup scales, often its users and volume of transactions will grow in lock-step. You could start to encounter mounting fees for payments like ACH payments, wire transfers, and checks you hadn’t anticipated at scale. Your bank account may have been free to open, but your transaction volume has graduated you to the next tier and now comes with a monthly fee.

The UI isn’t easy to use

A cumbersome user interface isn’t an insignificant issue. Perhaps you find it difficult to track down transactions or pull reports. This can impede your ability to glean valuable information, monitor operating expenses, and even gauge the performance of your various revenue streams. Overly manual or confusing processes can also consume your and your team’s most valuable resource — time.

The support is subpar

Maybe you’ve gotten overly familiar with long queues, unanswered questions, or the hold music at your business bank. Timely support is consistently undervalued with legacy banks especially, and often only accessible in a physical branch — a real obstacle for remote and global teams. Even with some neobanks, a dedicated and competent support team is often busy prioritizing only its largest clients.

Lack of integrations is limiting your choice of tools

You might find that as your startup incorporates new platforms for POS, HR and payroll, or bookkeeping and accounting that the integrations are not supported. This could be a reason to shop for a new business bank account that supports seamless integrations.

Investments and venture debt are out of reach

At the outset of a new startup, basic banking tools like checking accounts and quick access to sending and receiving funds will have been your priority, but as your startup evolves, you may need access to more sophisticated products to maximize cash on hand and extend your runway. If your business bank doesn’t offer accessible investment accounts or capital products, this could limit your business’s ability to grow long-term or to manage bank risk.

What should you look for when switching bank accounts?

Once you’ve taken stock of where your current business bank account may be falling short, it’s time to search for an account that delivers on your high-priority needs. To find a better fit, you’ll want to ensure the bank’s offering, core competencies, and values are aligned with your business in the immediate and the long term.

Here are a few key assets to look for in a new banking provider:

It helps you preserve your capital

Whether through raising, taking on debt, or bringing in revenue, building capital is no easy feat. Your priority is to preserve and deploy funds to operate and grow your business — not watch them get eroded by endless or unexpected fees. Banks that are transparent about pricing and that don’t charge a slew of monthly, account opening, and money movement fees can help you anticipate costs as you scale and keep more of your cash in your pocket. The other side of capital preservation is security, so be sure to choose a business bank account that maximizes your FDIC insurance coverage.

A UI designed with your business in mind

A business bank account with powerful, seamless, and easy-to-use tools, can help you stay in control of your startup’s finances. Look for user permissions and controls like read-only access for your bookkeeper and card-only access for your employees. Not only will a better experience give you a 360-degree view of where your money is going each day, but it will save you time that you can better spend scaling your business.

Access to top-tier investment and venture debt products

As your startup grows, its needs and cash management strategy will evolve, so more sophisticated investment strategies are a must. You may need to extend your runway with more capital, and establishing a relationship with your bank can help secure venture debt. Additionally, a carefully managed investment account can not only earn a competitive yield on surplus and otherwise idle cash, but it can also mitigate your company’s risk profile with lower-risk funds. Furthermore, some managed funds are composed of U.S. treasury bills that are backed by the U.S. government and can afford your investments additional insurance.

Support when and where you need it

A startup has unique needs that not every bank is poised to serve well. You’ll want a bank that understands the startup ecosystem and the financial services and tools that bring value to founders. A banking partner that understands your startup and its needs will also deliver support in more than the obvious ways, such as by spearheading community programs where founders can connect with VCs and offer one another insights and support.

Fits into your financial toolkit

A strong contender for your business banking partner won’t just be a single tool all its own; it will fit in seamlessly alongside the suite of tools your business relies on, such as accounting software like Quickbooks, Xero, Bench, and Puzzle. Easy integrations will save time spent doing double work and help simplify operations as you scale.

How do you switch business bank accounts?

First things first, you’ll want to make sure that your new banking provider is everything you hope it will be, so it helps to see if you can get a feel for the experience before officially switching over. Consider trying out a product demo to test out the new bank’s features and experience. Once you’re ready to proceed, you’ll need to start your application to the new bank account.

While the exact application requirements may differ depending on your business and the bank you’re switching to, you’ll need a few baseline documents to apply for a new account:

1. Your incorporation documents
2. An EIN (Employer Identification Number)
3. A piece of government-issued ID

Once you’ve been approved to open your account, you can begin the process of getting everything moved over — like payroll, cards, and more. When making the switch from one banking provider to another, you’ll need to ensure that your business can run smoothly through the transition. It’s smart to budget in a buffer for the time it takes for your existing bank to transfer your funds and possibly moving your funds over in two batches. You should also notify any necessary parties, like VCs and investors who will need your new banking information to send you funds, or vendors who you send payments to.

To complete the switch to your new business bank account, you’ll need to:

1. Initiate a balance transfer from your existing account.
2. Set up accounts, obtain your new payment methods, issue new cards, and invite your team.
3. Review and update your incoming and outgoing payments — paying careful attention to any scheduled or automated payments so nothing slips through the cracks.
4. Integrate your new bank account with your existing tools.
5. Close out your old accounts.

Remember, a strategic switch could lower the price your startup pays in banking fees and eliminate costly time-wasting work. Furthermore, there could even be an opportunity cost to missing out on advanced features and products that can better position your startup for success.

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With Mercury, you get:

• Free checking and savings accounts with up to $5M FDIC insurance through our partner banks and their sweep networks.
  Deposits in checking and savings accounts are held by our partner banks, Choice Financial Group and Evolve Bank & Trust, Members FDIC. Certain conditions must be satisfied for pass-through insurance to apply.
  ²
• Mercury Treasury which earns yield and protects idle cash in low-risk investments.
  Mercury Treasury is offered by Mercury Advisory, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. SEC registration does not mean the SEC has approved of the services of the investment adviser. This communication does not constitute an offer to sell or the solicitation of any offer to purchase an interest in any of the Mercury Advisory, LLC investments or accounts described herein. All investments are subject to the risk of loss, including the loss of principal. No representation is made that any investment will or is likely to achieve its objectives or that any investor will or is likely to achieve results comparable to those shown. Past performance is not indicative, and is no guarantee, of future results. Investments made through Mercury Advisory are not covered by FDIC but may be covered by SIPC. Some of the data contained in this message was obtained from sources believed to be accurate but has not been independently verified. Mercury Treasury is not insured by the FDIC. Mercury Treasury are not deposits or other obligations of Choice Financial Group or Evolve Bank & Trust, and are not guaranteed by Choice Financial Group or Evolve Bank & Trust.Please see full disclosures at mercury.com/treasury.
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• Instant virtual credit and debit cards
  The IO Card is issued by Patriot Bank, Member FDIC, pursuant to a license from Mastercard.The Mercury Debit Cards are issued by Choice Financial Group and Evolve Bank & Trust, Members FDIC, pursuant to licenses from Mastercard.
  ⁴ for the whole team with custom limits upon approval.
• Access to Mercury Venture Debt to extend your startup’s runway.
• Best-in-class security to keep your funds and your data safe.
• A community of startup founders and VCs through Mercury Raise.

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