Wednesday, July 29, 2009

Business Banking in Ireland

I'm getting some great questions lately and an old one came up quite recently. It was: Which bank should I set up with as I start my new business?

There is no one bank I could heartily recommend over another - mainly because I am not familiar enough with all the running charges in every type of business - retail, B2B, online, international - all businesses need different services from a bank so there is no one answer for everything.

What I can tell you is that where one bank has smaller charges, they will probably charge more in other areas, so it will take a small exercise to get a proper balance on what bank is best for your business specifically.

If you have been working in a similar business to the type you are setting up, have a look through old statements, making a note of every single charge there. If you can't tap into something like that, then really focus on the operational side of your business and think of every possible area you might need to use the services of a bank. For example if you are setting up an online shop then you will need to talk to the bank plus someone like Elavon plus someone like Realex to get everything up and running. Apart from making all three of their systems integrate with your own system. Sigh!

In simple terms, do up a spreadsheet and mark down what your needs will be, then pick up the phone and call the commercial department in three or four banks to see what they charge. Some of them will no doubt tell you that they will charge you zero on various items for the first two years - take down what the costs will be in year three for your comparison.

I suspect you will find they are all on a par by the time you weigh everything up. Ulster Bank and the Bank of Ireland have been fighting hard for Start-Up business in recent years, so they will be quite competitive in the short term - that is why I advise you to check the associated costs in year three! The same goes for the saving element. If a bank is quoting you a great interest rate, check for how long they are willing to offer it, and what are the penalties for dipping into savings if needs be.

The other important factor of course is the relationship you have with your bank. You need to be able to trust your bank manager and not be afraid to call them when something goes wrong. If you have developed a good relationship with AIB for example but would like to move to another bank, make sure they have a personal touch in the bank you are moving to, so that you can call them for advice as quickly as you can call them to flag any upcoming issues such as repayments on loans.

The final thing I'll say to you is - haggle! Banks desperately need to make money at the moment so they won't be giving their services away for free - but then, you wouldn't either, so why should they? At the same time, they are hungry for business so don't be afraid to play one off the other and get them down as far as possible on their charges.

Good luck!

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