Dental Practice - February 2017 | Page 82

BANKING FOR BUSINESS – HOBSON ’ S CHOICE ?

BY ADAM BERNSTEIN , DIRECTOR

� Dentistry is a regulated profession with many unique attributes . However , being unique doesn ’ t remove the need for a dentist , as a business , to have a dedicated bank account . But while dentists can work their way through the maze of autoclaves , panoramic x-ray machines and ultrasonic cleaners , the same may not necessarily be true when choosing a bank . Indeed , to the layman , it ’ s a minefield of options and charges .

So how do you make the choice ? What is a ‘ good ’ bank ? The answer depends on your priorities .

Some might consider proximity to a branch on the way home important because they have cash to deposit – a key consideration for retailers , but it ’ s less so for dental practices as card transactions have become a major method of payment . Others may want a bank with a UK base . Dealing with call centres can be bad enough and highly impersonal , but add into the mix a thick overseas accent or someone who doesn ’ t understand the nuances of UK life and the relationship is bound to become strained . Let ’ s not forget that some may have to dial non-standard , chargeable , numbers such as 0845 , 0870 and 0844 . For them , alternative number website saynoto0870 . com is a god-send as a way of finding less expensive numbers .

But there are other considerations to bear in mind – online security , banking facilities and of course cost .

��T�S ���� �T T�� ��T���S �� D�T����

FIRST PRINCIPLES Using a personal bank account is possible , especially if you ’ re unincorporated , say a microbusiness or a sole trader . However , it ’ s not recommended for a number of reasons . Firstly , you ’ ll have no separation of personal and business monies ; in other words , you ’ ll not be able to easily tell how well the practice is performing . Secondly , and this has a serious unintended consequence , HMRC do not like the practice and if they decide to investigate your affairs ( by random selection or following a breach ) they can then latch on to your use of a personal bank account as an excuse to widen the investigation into other aspects of your ( personal ) finances .

Ideally , you should seek a business account that offers a debit , credit or charge card in addition to cheques ; having a business card has the added benefit of insulating a user from any personal liabilities for the business transaction .

FILTERING THE ACCOUNTS Taking a stroll down the high street is the most obvious way of finding a bank but , as a process , it is very time consuming . An alternative is a bank comparison tool offered by the British Bankers Association ( http :// bba . moneyfacts . co . uk ). In simple terms , it allows a search to be conducted based on entity ( sole trader , partnership , company , club / society , or charity ) and then on facilities required ( branch , debit card , overdraft , and credit interest ). Upon making the appropriate choices the matching range of bank accounts is presented – the range can be bewilderingly long .

At the time of writing ( 25 October 2016 ), a limited company can apply for accounts with a wide array of charges . Cheques written can cost anywhere from nothing ( Santander Business current account – four levels of flat rate monthly fee apply based on levels of cash deposited ) to £ 1.50 ( Barclays Bank e-Payments Plan ). Exactly the same charges apply for cash deposited . On a positive note , Santander pay 0.25 % interest on credit balances as will Metro Bank ( Client Premium Deposit – 0.1 %) and Yorkshire Bank says that it will negotiate on interest paid on some accounts . The majority pay nothing .

Remember that it ’ s also worth looking at the individual bank websites as the BBA website can lag on changes the banks make to tariffs .

Apart from the BBA , from the end of July ( 2016 ), a second online comparison tool became available to SMEs . Operated by British Banking Insight , it ’ s a collaboration between HM Treasury , the British Chambers of Commerce and the Federation of Small Businesses . It ’ s independent of any bank but has an advisory group consisting of a number of banks and the government .

To be found at http :// www . businessbankinginsight . co . uk / currentaccounts /, it offers suggestions based on ratings on charges and fees , ease of contact , understanding of business , fair treatment , and having concern for the client . Visitors search for recommended banks using criteria based on turnover , business sector ( there ’ s a dropdown for Human Health and Social Work Activities ), level of international activity , age of business , number of employees , and location . Each option has a subset of categories to refine the search . The returned results list only the organisation and ‘ user ’ reviews – no product options are detailed – but there are direct links to the institutions . The site is new and the number of reviews needs to grow , but nevertheless it is an interesting way of searching for a new bank .

As an example , an SME searching for a bank in the Human Health and Social Work Activities sector ( the closest to dentistry ) would see 21 institutions returned . Again , at the time of writing , in prime position based on a rating of 100 % is Smile Bank , the Cumberland Building Society , and Metro Bank . Second , with a rating of 89 % is Handelsbanken , and third is First Trust with a rating of 50 %. The point is that it ’ s possible to find institutions that wouldn ’ t normally spring to mind .

Not featured on either site is detail on loan accounts or foreign currency accounts . Nor is there detail on merchant accounts that allow for the processing of credit and debit card transactions - but that is another subject entirely for which help can be found on the UK Cards Association site at http :// bit . ly / JnCcMc .

One thing you should do is look for any introductory rates that may be available . These are presently few and far between and are invariably targeted to the new business – practices - with offers of time-limited free banking . At the time of writing , Santander offer a 12-month deal , TSB gives 18 months , while Yorkshire offers 25 months of free banking . You should look at the charges beyond the initial period .

COST ISN ’ T KING While it ’ s entirely logical that businesses will , to an extent , focus on the cost of the banking arrangement , it shouldn ’ t be the tail that wags the dog – it ’ s only one part of the calculation .

Consider if you want a branch or if banking facilities via a Post Office or post box will suffice ? Also , do you want face-toface contact with a manager or small business advisor ( not that they are always real experts in business )?

Do you need an overdraft or other borrowing facilities ? How good is your credit rating , both personally and for the practice ? It ’ s naturally going to be harder to open a new account with an overdraft or if you have financial issues with your old bank - by definition , this will restrict the institutions open to you and while you may get a lower

u