Online Business Bank Accounts

Considering Online Business Bank Accounts

Choosing the right business bank account is a pivotal decision for any company, from a fledgling start-up to an established enterprise. In an increasingly digital world, online business bank accounts have emerged, evolved and are now one of the key requirements for businesses. These accounts, managed primarily through web browsers and mobile apps, offer a suite of features designed to integrate and streamline financial management and cater to the fast-paced nature of modern business.

The primary appeal of online business bank accounts lies in their convenience and accessibility. The ability to manage your finances from anywhere, at any time, without the need to visit a physical branch, is a significant advantage for busy entrepreneurs. This self-service approach often translates into a more efficient and faster banking experience for everyday tasks. 

Key Considerations When Comparing Accounts

When embarking on your comparison journey, it’s important to look beyond the headline monthly fee. A thorough evaluation of several key features will ensure you select an account that aligns with your business’s operational needs and financial habits and avoids creating unexpected charges and fees.

Understanding the Fee Structure

While many online providers offer accounts with no monthly fees or a fee free introductory period, it’s essential to delve into the specifics of their charging structures. Transaction fees, for instance, can vary for activities such as UK bank transfers, international payments, and ATM withdrawals. Some accounts may offer a certain number of free transactions per month before charges apply. For businesses that handle cash, it’s also important to check the fees and limits associated with cash deposits, which are often facilitated through partnerships with high-street banks or the Post Office.

Functionality and Features

The best online business accounts provide more than just a place to store your money. Look for features that can actively support your business operations. These can include:

• Accounting Software Integration: Seamless integration with popular accounting platforms like Xero, QuickBooks, and FreeAgent can significantly simplify your bookkeeping and make tax time less of a headache. 
• Multi-currency Capabilities: For businesses that trade internationally, the ability to hold and exchange multiple currencies within the same account can be a game-changer. This feature can help you avoid conversion fees and manage international transactions more efficiently, proactively managing exchange rate fluctuations.
• Team Member Access: As your business grows, you may need to grant financial access to other team members. Look for accounts that offer multi-user access with customisable permissions, allowing you to delegate tasks while maintaining control over your finances.
• Payment and Invoicing Tools: Some online accounts come with built-in tools to create and send invoices, as well as features to manage and schedule payments, helping you to stay on top of your cash flow. 

Overdrafts and Borrowing

An overdraft can be a valuable safety net for managing short-term cash flow challenges, providing a buffer to cover unexpected costs or late payments. When comparing accounts, check whether an overdraft facility is available and what the associated interest rates and fees for usage are. Look for providers that also offer other forms of business loans or credit cards if you feel this could be important for your business at some point in the future.

Security and Regulation

Ensuring the safety of your funds is paramount. In the UK, the Financial Services Compensation Scheme (FSCS) protects eligible deposits up to £120,000 per authorised financial institution in the event of a bank’s failure. Understand whether the online account provider you are considering is FCA regulated and offers FSCS protection. Some online account providers are classified as e-money institutions and while FCA regulated, may not offer FSCS Protection but use a different scheme referred to as Safeguarding. 

Safety is not just about limiting your losses should an institution fail, it’s the protection of your funds and private data against fraud. Check the security features of any potential business partner. Remember you don’t have to have all types of banking under one roof, you can hold funds in a business savers at a separate provider to your everyday transactions, if that makes you more comfortable. 

The Switching Process

If you already have a business bank account, the Current Account Switch Service (CASS) can make the process of moving to a new provider straightforward and hassle-free. This service will transfer all your existing payments, such as Direct Debits and standing orders, to your new account within seven working days, and your old account will be closed. Check to see if a provider participates in the scheme. 

Making an Informed Decision

Ultimately, the best online business bank account is the one that most closely fits the unique needs of your business. Take the time to assess your transaction habits, your need for specific features, and your long-term growth plans. By carefully comparing the available options, you can find an account that not only simplifies your financial admin but also supports your business’s journey to success.