How Well Does Your Bank Meet Your Business Needs?

By Jeffry M. Finkel The following article was published in the Atlanta Hospital News in September, 2009. Increasingly, it seems like new financial challenges to running your practice are the rule rather than the exception.   Do you ever feel like you are in an arcade shooting gallery, and every target that pops up is another financial headache?   Whether the challenges are cuts in reimbursement, costly regulations, increased vendor expenses, or myriad other costs, every practice needs helpful business partners to ease the burden. How helpful is your bank?  Do you view it as a valuable partner whose products, services and level of customer service meets your business and personal banking needs?  Or, do you view banking as a commodity because your bank’s offerings seem the same as those of every other bank?     Whether choosing a bank for a new practice or evaluating your current bank’s level of assistance, here are some tips to consider.    Choosing a Bank Choosing the right bank can be nerve wracking due to numerous considerations.  Banks offer similar products and services, so make the process easier by narrowing your considerations to the most important.  Then, check out several banks.  Eliminate those that do not meet your essential needs - for example, close proximity to a branch or having a personal banker with medical banking experience. Which of the following considerations are most important to you? What business and personal banking services do you and the practice need? How essential is having a personal banker?  How important is close proximity to a branch? Does the bank offer online banking and “bill pay” service? Can the bank meet your loan requirements? Does the bank offer features you may need such as remote deposit, overdraft protection, lockbox, safe deposit box, free checks, ATMs, 24-hour banking, courier service, and lines of credit? How reasonable are the bank’s fees?  Banks are suffering from the economic downturn, and many are implementing and/or raising fees to increase revenues (e.g., bounced checks, wiring money, statement copies, etc.).   How healthy is the bank?  This is essential due to the recent increase in bank failures. Additional suggestions: Determine how many items you process monthly (e.g., deposits, paid checks, merchant processing deposits).   Then investigate the bank’s checking account options.  Note: Each item on a deposit slip is counted as a separate item. Can you maintain a high enough daily balance or do you have a large enough loan from the bank to qualify for free checking?  With free checking, how many “free” items are you permitted?  How much do additional items cost? If you don’t qualify for free checking, what options are available for fee-based accounts?  Carefully choose which one is best for you.  Consider this scenario:  You process 275 items monthly.  Your bank offers two options: Option A:  200 items for $20.00 plus $.35 for each additional item Option B:  300 items for $30.00 plus $.20 for each additional item Option A may initially appear less expensive since the monthly fee is lower ($20 vs. $30); however, Option B is actually less expensive due to the $.35 fee for each item in excess of 200.  Option A would cost $46.25; Option B only $30.00.  In a large practice that processes many items, choosing carefully could save considerable money. Consider having overdraft protection.  Select either (1) overdraft transfer from another account or (2) automatic activation of a line of credit to avoid expensive “bounced check” fees. Consider “lock box” service whereby patients send their payments to a bank rather than to your office.  Potential benefits: payments often reach your checking account faster, potential for theft is eliminated, and practices save on the personnel costs of processing checks.  Be sure to measure the cost of lockbox service against its benefits. Consider using “sweep” accounts.  Company accounts often are ineligible to earn interest.  “Sweep” accounts allow deposits into a checking account that are in excess of the balance necessary for “free” checking to be transferred to personal or money market accounts that earn interest. Ensure your bank is Federal Deposit Insurance Corporation (FDIC) ensured.  Not all internet banks are insured. Consider purchasing checks from sources other than the bank (e.g., Costco or SAMS Club) to save money. What steps might you take to ensure that you receive the best value in banking services? Visit www.OverheadReductionServices.com for other money saving advice.  Jeffry Finkel is CEO and owner of Overhead Reduction Services.  Contact him at (404) 995-9112 or at Jeff@OverheadReductionServices.com.