Switching to a new banking service can feel tedious as a business owner—after all, there are much bigger tasks on your plate. From researching different banks to importing your automated expenses, each step of the transition can make you want to quit before even starting. But considering how much the right banking platform can transform your business finances, it may be time to say goodbye to your old bank.
Transitioning your current expenses is a critical part of changing business banks. That's why it's essential to know the signs that you need to change your bank and the steps you can take to ensure there's no disruption to your automatic payments.
Read on to learn if now's the right time to change business banks, the advantages of doing so, and the simple steps you can take to make the switch.
Signs you need to change bank accounts
One of the most challenging steps in changing business banks isn't switching—it's knowing when to do so. As a business owner, you're likely busy executing multiple initiatives at once, and it's only when you run into issues with your bank that you decide to look into other options.
Because of this, it's worth looking out for common signs that it's time to switch, so you can get ahead of any issues before they arise. Let's take a look at some of the common culprits.
You need more banking services
One of the most frequent complaints we hear from business owners is that their current bank doesn't offer the services they want. The right business banking platform will make your finances easier for you. You don't need anything slowing you down on your way to the top—especially an outdated bank.
Necessary banking services include organized cash and expenses, dedicated bank accounts, cards, and team spending limits, to name a few. If your current financial institution doesn't support multiple business checking accounts or integrated accounting tools, you're missing out on critical infrastructure for growth.
You're paying a lot in fees
Small fees here and there may sound like a necessary evil, but they can stack up before you know it. And we know that every expense matters when building a business. It's frustrating, to say the least, when you find a hidden charge or recurring monthly fee.
Many banks also have minimum balance requirements, forcing you to always keep a certain amount of money in your account. This can cause a real strain on small businesses and hinder growth, especially if you're trying to open multiple checking accounts and manage cash using digital envelope budgeting. The right banking solution won't charge you extra fees—no account overdraft or withdrawal fees.
You have to visit a physical location
If you're too busy to notice the hidden fees your current bank charges you, you're certainly too busy to make a trip to a physical branch. Gone are the days when you have to make a withdrawal or get approval at a bank location. Now, you can do everything you need as a business owner through an online banking platform.
With flexible online banking, you can empower team members to pay bills, issue debit and credit cards, and secure spending from anywhere at any time. A digital bank vs traditional bank comparison reveals significant advantages in accessibility and speed for small business owners.
Your bank can't grow with your small business
With outdated services, your current bank could actually be hindering your growth. We're talking about a disconnect between banking and accounting services, a limited number of accounts, and fees that hijack your savings.
The right business bank can grow with you, helping you at every step by giving you clarity and control of operating expenses, cash flow management, and accounts payable. If you're limited to one or two accounts when you need five or ten, your banking relationship is holding you back.
You're experiencing poor customer service
When it comes to your banking relationship, it can be frustrating to experience poor customer service time and time again. This is especially true considering you're taking time out of your busy schedule to visit a branch location or schedule a call.
Ultimately, it's important that your bank provides hassle-free support to help you when you need it most. Whether you're looking for a simple answer or need help tracking down a charge, the right bank should provide you with the customer service you deserve.
How hard is it to switch banks?
One of the biggest misconceptions about switching banks is that the process is hard. But the reason you think that is due to your existing outdated banking systems. In reality, switching business banks is not hard and only takes about 10 minutes with a platform like Relay.
The right online business banking platform should make the process easy for you. This includes offering a simple online onboarding process, outlining key account steps, and ensuring your automatic payments are set up so you don't experience disruptions.
Keep in mind that different banks offer different services, benefits, and fees. So one of the most challenging parts of the process is choosing the right banking experience for your needs. Looking at the best business checking accounts can help you compare features and fees side by side.
How to switch bank accounts
If you're ready to make the switch, we can help guide you through the process of switching bank accounts. When changing business banks, all you need to do is gather a few key documents to start the process. For a comprehensive walkthrough, see our guide on how to switch business bank accounts.
1. Research your options
If you're looking to switch banks, chances are you're looking for something your old bank can't provide. Consider the top services and features you're looking for, like an online platform, expense categorization, and multiple accounts, then research which banks will meet those needs.
When comparing different financial institutions, you should consider the features they offer and the fees and rates associated with the bank. A good bank should outline all costs, if any, ahead of time to ensure you don't get blindsided with charges. Additionally, verifying that your new bank is FDIC insured is also a good idea to protect your money. In the event of a bank failure, this insures deposits up to $250,000.
2. Apply for an account
You've picked the right bank—now it's time to apply for a new business checking account. Each bank offers a different application process, so it's hard to say how exactly to do so. But with online banking platforms, you'll be able to apply online at any time.
The process should be fairly quick but will depend on the bank you choose. At Relay, the online application process takes less than 10 minutes from start to finish.
3. Provide necessary documents
The documents needed to open a business bank depend on the type of business you own. In general, you'll need to provide:
Photo of Government-issued ID
Social Security Number (SSN)
Mailing Address
Phone Number
Email Address
For corporations and LLCs, you may need to provide additional information such as your EIN and Articles of Organization.
4. Identify all your incoming and outgoing payments
When setting up your new account, it's important that you don't forget to set up your recurring payments, both the ones you send out as well as any incoming deposits. Don't close your current account until all recurring monthly expenses are posted to ensure there's no delay in payments.
While it may seem tedious to identify and update each recurring payment at the start, if your new banking platform offers recurring payment features, you stand to save a lot of time in the future. With Relay, for example, you can manage bill payments with multi-step approval workflows and scheduled recurring payments directly from your account. Once you pay a bill, the transaction is auto-synced with accounting software integrations, like QuickBooks Online or Xero, for one-click reconciliation.
You wouldn't want to miss out on any revenue, so it's also essential you wait until all incoming payments are posted before closing your account. With a platform like Relay, you can rest easy knowing that we can request payee information, W-9 forms, and securely store payee information for future use. Now that's not your traditional banking service.
Your bank may also provide a "switch kit." With a switch kit, the bank will notify providers and suppliers when you transfer automatic transactions. This can simplify the account transition process significantly.
5. Close your old business checking account
Finally, it's time to say adios to your old bank. Once you set up your new account, transition your accounts payable, and all physical checks on your old account have cleared, you can close your old account without looking back.
You may be able to call to cancel your account, or you may have to go to a branch to submit a cancellation notice. Additionally, your bank may ask you to fill out certain forms for the account closure. The bank will then release the remaining funds after all transactions are processed.
What are the advantages and disadvantages of switching banks?
When considering if now's the right time to switch business banks, weighing the pros and cons can help you make the right decision. While the process can be quick and hassle-free with the right bank, there are some drawbacks to consider beforehand.
Pros of switching business banks:
Take control of your cash with a smarter money management platform
Obtain more comprehensive banking services
Save money on monthly fees and hidden charges
Ditch the visits to a branch location by choosing an online platform
Organize your cash and expenses into separate, single-purpose checking accounts
Improve cash flow visibility with better reporting and account structure
Cons of switching business banks:
Can take time to research the right bank
May disrupt automatic payments if not executed correctly
Requires you to learn how to use the new bank account system
Will require you to order and wait for new debit cards and checks
What should you do after switching banks?
Once you've switched bank accounts, all there's left to do is get to know your new system. With an online banking platform, you can gain insight into your spending habits, auto-sync your accounting integrations like Quickbooks, and categorize your expenses to manage your finances better.
Ultimately, it may be worth switching banks if you're paying too much in fees and missing modern features like mobile banking, no-fee ATM withdrawals, and automated transaction data. At the end of the day, the choice to make the switch is up to you. Choosing a new bank can better meet your business needs and set your finances up for success.
Additionally, the right bank will grow with your small business by offering areas for you to expand. This includes allowing you to open numerous accounts and providing a platform that understands your spending behaviors. Consider learning more about managing multiple bank accounts to get the most from your new banking setup.
If you're ready to make the switch, consider the benefits of choosing Relay. Spend, save, and plan more efficiently with unparalleled clarity into operating expenses, cash flow, and accounts payable.
Relay1 lets you open up to 20 checking accounts, connect your accounting tools directly, and set up recurring payments in minutes. If you're ready to switch to a banking platform built around how cash actually moves in a small business, open your account today.
1 Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
Frequently Asked Questions
Will switching banks affect my business credit score?
Switching business banks does not directly impact your business credit score. Credit bureaus track credit accounts and payment history, not banking relationships. Opening a new checking or savings account involves no credit inquiry and won't appear on your credit report.
How long does it take to switch business bank accounts?
With an online banking platform, switching business bank accounts takes about 10 minutes to apply and get approved. The full transition—including moving recurring payments and closing your old account—typically takes 2-4 weeks to complete safely.
Can I keep my old business bank account open while testing a new one?
Yes, you can keep both accounts open during the transition. Many business owners run accounts in parallel for 30-60 days to ensure all recurring payments transfer smoothly before closing the old account.
What happens to pending transactions when I close my old business account?
Your bank will process all pending transactions before closing your account. Wait until all checks clear, automatic payments post, and incoming deposits settle. The bank will then release any remaining balance to you, typically via check or transfer.
Do I need to notify the IRS when I change business banks?
You don't need to notify the IRS when you change business banks. Your EIN and tax obligations remain the same. However, if you have scheduled tax payments or direct deposit for refunds set up, update those with your new account information.
