When it comes to choosing which bank account to use for your business it can be a bit of a mine field. Should you stick with using the same bank that you use for personal banking, would one of the high street banks be best or are online banks accounts the right approach? At the end of the day everyone wants the same thing, something that is simple and straight forward to set up and then easy to continue using.
This is why we’ve seen a rise on the use of online bank accounts such as Starling, Tide, Monzo ect. Seemingly these accounts are easy to open and access, but could they be causing you cashflow problems?
While we aren’t experts in which bank accounts are right for business (we do know people who can help, should you need some extra advice) we do know a thing or two about helping businesses get access to funding. And one of the biggest barriers at the moment is the business bank account.
Once a lender has received an application, they need to be able to check the businesses bank statements, to check that the business has the cash they say to be able to pay back the loan, and a place to pay the loan back into.
This falls down with online based accounts and it’s to do with the system. Lenders use automated systems to read through the bank statements that automatically flag up any problems. This is to help speed up the process the lender takes in approving loans, rather than having a person painstakingly pour over bank statements going down each transaction one at a time.
Why? They’re perfectly good businesses and these bank accounts are safe and secure, so what’s problem.
These online bank accounts display their bank statements in a different way to how the high street banks do it and how the lenders systems are built. At the moment the lenders technology isn’t set up for these new online banks and they don’t have the teams to manually do it, resulting in a ‘Computer say’s no’ approach to anyone who has a business bank account with any of these online accounts.
As time passes and more people pick up these online accounts something will have to change, whether it’s the lenders updating their systems to include these types of statements or the online accounts changing the way their statements are displayed.
We are seeing this more and more that as technology grows and new things come into play that not everything is growing at the same rate causing a lag. These online bank accounts are great for businesses just starting up, as they are quick and easy to set up but are causing problems later down the line when businesses are looking for funding to grow.
The online accounts seem great if you aren’t looking at getting commercial finance in the near future however there is always too many variables within business to completely rule out getting funding … yes, we’re looking at you global pandemic.
So, if you have an online bank account and are wondering why the lender turned down your application this is your reason why.
At ABL we always want to provide businesses with advice that can help their situation, we are always speaking to the lender to find out the best way we can support growing business and what solutions are being put in place. This is one such topic that we are always keeping our eye on and something that we hope we are able to share better news on soon. In the meantime, if you want advice on your business bank account, get in touch. We have a wide range of advisors that we work with who we are happy to put you in touch with.
If you want to find out further information about this topic you can get in touch with the ABL team via email or call the office on 01274 965356 to talk through your options.