How to switch business bank account in Australia
Business bank accounts are a must-have for smooth business transactions. The earlier a business gets this, the better it can take control of its finances. But a business account doesn’t work the same way in all stages of a business.
The problem can be with increasing prices, accessibility, service, or transaction speeds. Banking experts suggest that it’s okay to switch business bank accounts if the former one doesn’t match your expectations.
Worrying about the drawbacks of switching business bank accounts from one bank to another in Australia? It’s actually simple and doable with prior preparations.
Factors to consider for switching business bank account
Changing business bank accounts includes filling out many forms and meeting new account providers to finalize one. So, the decision to switch business bank accounts cannot be made randomly.
Here are some factors to weigh if your business requires changing business bank accounts.
But before evaluating the factors for switching your business bank account, it's essential to understand how a personal bank account differs from a business account. Explore our blog on the difference between personal bank account vs. business bank account to gain valuable insights.
1. Lack of features in the existing bank
Features are the foremost factor businesses compare when selecting a business bank account. Some small businesses go for accounts with limited features to save money. This account can’t serve the same purpose as the company grows. It can miss important features like expense management, multicurrency wallets, or vendor bill payment apps.
Rather than having a separate application to manage this, they eventually prefer to change business bank accounts and opt for a modern business account with advanced features.
2. Paying excess charges
Banks and financial institutions share the pricing plans with customers before they choose the account. But the bill at the end of the month can be a shock as it has hidden and elevated charges. These higher fees can be a dealbreaker for small businesses that have fixed budgets for every expense.
Moreover, the monthly bill might increase if your expense bandwidth expands. This additional cost is a burden that can be a reason for changing business bank accounts.
3. Majority of banking ops are done online
Checks and cash have been replaced by online and wallet payments now. Most fintech companies offer this privilege to their business customers and simplify their payment operations.
They also reduce the need to visit the branch physically for account application or any other banking process. Any business that wants to enjoy this benefit of not leaving their office for banking work has the urge to switch their business bank account.
4. Unhappy with the service of the current bank
It’s not possible for a bank to offer a banking product with zero glitches. What matters is the level of service and support they offer to their customers. Financial institutions that pay delayed attention to their customers get replaced by the ones who stay close to their customers at every step.
With an endless number of banks and private institutions offering business banking services in Australia, customers have more options to choose from and switch when an inconvenience occurs.
Requirements for switching your bank account
Once you have established a reason for switching business bank accounts, start preparing the documentation. The requirements are very simple.
1. Basic required information needed
You should provide the basic information about your business and its Australian registration to the bank where you are opening a business bank account. These details include
● Your company name as per the AISC registration
● ABN or ACN
● List of company directors
● Registered office address from where your business operates
● Trading name
● Certification of Incorporation and Articles of Association (if applicable)
2. Signatories and other documentation
According to the Australian government, you must provide the required identification proof of all directors. To validate this, they use a point system where a certain point is assigned for each document.
The maximum possible sum of all points that you stand to gain is 100. Accepted identification proof that you must submit for all directors are
● Driver’s license (40 pts)
● ID card (40 pts)
● Passport (70 pts)
Along with the above documents, the applicant should include the filled and signed (by 2 or more directors) application form. There is also the account signatory that must be signed by the authorized signatories of the company.
How to switch business bank account?
Australian banks follow a standard procedure to help customers switch business bank accounts. Here is what you will go through to move your account entirely to a new business bank.
1. Prioritizing business needs
Choosing a new bank account needs thorough introspection. Take a moment to reflect on the shortcomings of your current business account; decide what you want and what are the dealbreakers.
The list is exhaustive and very specific to your business needs. They could be, for example, but are not limited to, some of the options listed below.
● An online dashboard or mobile app for one-click payments.
● An interactive platform that offers auto-insights and allows you to go over past payments.
● Low foreign payment fees.
● The option for a multi-currency account to manage international transactions efficiently.
● Potential pain points that could be deal breakers include
● Higher maintenance fees
● Non-transparency in fee structure
● Non-availability of diverse payment options.
With time, a business grows — and so should the banking provider. How? By coming up with new innovations. Hence, it’s a must for a business owner to see if the bank can provide support when there is future growth at booming levels.
2. Apply for a business bank account
As you establish the set of requirements, it will be much easier to narrow down the best bank/financial institution for your business. Once a bank is selected, move forward with the application process.
Many traditional banks have moved to an online application process. But the applicant might be required to visit the bank for verification or signing purposes. Due to these reasons, it can take up to five days to access your bank account.
However, modern online banking solutions have simplified this with online forms that can be filled out within 5 to 10 minutes. Their processing times are faster than traditional banks, which is a plus for growing businesses with more routine transactions.
3. Transfer direct debits and other payments across
As soon as you get access to the new business account, accounts payable and receivables should be moved to avoid payment clashes. You can start with accounts payables. This is a one-time task that the business owner must do to move your business payments to the new provider.
The major tool that can help with this is your yearly statement from the old bank. This will have all payments and major subscriptions that your business has paid to in a 12-month period.
Choose the list of payees that you will still be sending funds to, and add them to the new account. This applies to anything from a monthly subscription fee to utility bills.
If this includes vendors to whom you are making bill payments, a formal notification about the account change can help their collections team with documentation.
4. Update your collections process
In the case of B2B businesses, payers should be intimated at the earliest about depositing money into the new business bank account. Add the new bank account details to the upcoming invoices. This is information that might get missed, sometimes.
To avoid any miscommunication, or future hassles, have your accounts receivable department send a formal email to all payers about the new payment methods and details.
5. Close old accounts
By closing the old account sooner, you can avoid the next monthly payment cycle. Ensure that your team has gathered all the required information, collected the necessary closing documents, and backed up all important data.
Then, close the old account formally by reaching out to the old bank. You will be required to fill out closing forms and settle pending charges to close the account.
The bank will try its best to hold your account and offer better prices. It’s advisable to carry out this process by visiting the branch and dealing with them upfront.
Don’t give into the attractiveness of an offer if it doesn’t resolve any of the issues that made you switch providers in the first place — and even then, if your new provider goes above and beyond in serving your purpose, then it is best to stick to your decision.
Must-have features for a business bank account
For small businesses to have optimized business bank account utilization, they must know the must-have features it offers.
1. An online portal for payments
Checks and in-branch transactions are obsolete in 2023. The bank should have a well-developed online portal through which you can make and monitor payments. There should be higher visibility on real-time payments that go in and out of the account.
2. No limits on transactions or account users
Certain banks place limits on the number of users that can be added to the platform. If you have a growing business with a guaranteed increase of employees in the future, this can be a limitation for you. So can the everyday transaction limit.
For a healthy payment cycle, financial experts suggest businesses make prompt payments. When limits are placed, you can’t achieve this, as the limit restricts the fund movements.
3. Advanced payment options like corporate cards
Most banks do provide debit cards and international debit cards. However, one card cannot solve all payment requests magically. Access to multiple cards or unlimited virtual cards is optimal, as you can categorize payments and use different cards for each.
4. Auto syncing options
Payment mediums, when integrated with other accounting platforms, further reduce the mess that you will otherwise handle manually. The integration option makes your software automatically transfer selected data from one to another.
Australian businesses use accounting software like Xero or MYOB. The provider must have an open integration platform that will connect with this.
5. Budgeting and spending limits
To place a cap on your spending, the platform should allow you to tag expenses with budgets and add flexible spending limits. This way, you spend less and can also view what’s spent under each budget category.
Open a multi-currency business account instantly with Volopay
It’s normal to feel anxious about not repeating the same mistake while choosing a new business bank account. Many businesses have been through this rigmarole, where they meet multiple account providers with look-alike products. These accounts support them for a while but fall into the same pattern after some time.
To give your payment processes a fresh start with an advanced set of tools and technology, take a look at Volopay. Volopay has many customers who were unsatisfied with a previous account provider.
Later, they switched to Volopay business accounts, which ticked all their boxes.
● Online business account application within minutes. Simplified documentation and quick approvals ensure you access the account within 1 to 3 business days.
● Multi-currency accounts to load money in foreign currencies and make international payments rapidly at lower exchange rates and competitive conversion rates.
● Unbeatable visibility and transparency — admins can see the status of transactions that have been processed and waiting to be processed.
● Corporate cards for employee and subscription payments — Volopay offers the ability to create unlimited virtual cards, each with a unique assignee, department, and spending limit. Every transaction can be monitored, and additional credit can be approved upon request.
● End-to-end invoice management - Automate your invoice payments with Volopay and never pay your vendors any late fees. Schedule them ahead, set reminders, and use automated approvals to make them go out on time.
● Credit on-demand to fuel your business growth — fund shortages can be met with in-app credit requests. It only takes a few minutes to apply. You have a whole month to use the assigned credit and repay at the end of the cycle.
● All payments under one roof — Volopay has the infrastructure to plan and make all outgoing payments from within. This way, your accounts payable can keep track of payments all the time.
● Can integrate with Xero and MYOB — Volopay integrates with most accounting platforms, making data transfers automatic.
Your business account is no longer a checking account that holds money and lets payments through. With the right providers, you can amplify its potential and have strong control over what goes out.
FAQs
It’s possible to change business bank accounts in Australia quite easily. The process itself might seem complicated, but with the correct guidance and preparation, it can be quite smooth.
There isn’t any downside to switching bank accounts in Australia as long as you find a better service provider. There might be inconveniences related to migrating banking data from the old platform to the new one. You will have to cancel the auto-debits and set them up once again with your new bank account. Other than that, switching business bank accounts is a lot simpler than you think.
No. Switching business bank accounts doesn’t affect your credit score in any way as long as you have paid every pending fee related to the old bank and closed the account for good.
Closing the old account is recommended, as an inactive account can still attract maintenance or other charges.
Businesses in Australia can close accounts by contacting their current bank/account provider. The account owner can state the reason for closing the account and consider other options they offer. There will be a couple of forms to fill out and signatures to provide before the exit process is completed.