Which Business Bank Account is Best?

March 20, 2024

You’re either growing or you’re dying.

It’s a popular saying in business, and fortunately for many of the businesses in our community, the latter seems to be truest. In our most recent Bank Iowa Business Index, a full 83% said their business either increased (25%) or remained steady (58%) in 2023.

Growing businesses have many needs, but key among them is a set of banking tools that will grow alongside them. Even the most basic business deposit account should be flexible enough to mature as the business's needs change.

Whether you’re just starting out or switching banks, there are a few questions you may want to ask before opening your first account with a new financial institution.

1.         Is there an average balance requirement?

Most business deposit accounts have higher average balance conditions than personal deposit accounts. This is largely because businesses conduct more transactions than consumers. They also face an outside risk of fraud as compared to private individuals. Your typical average balance will be one of the factors that determines which account makes the most sense for you.

As that average balance grows, your right-fit deposit account may change. Be sure to ask your banker what those transaction-volume milestones look like so you can plan ahead.

2.         Are there transaction limits?

Understanding broadly how often money will flow in and out of your deposit account is another helpful piece of information to bring to your new bank. The typical number of transactions will influence the type of account a bank relationship manager recommends.

Here again, it’s a good idea to know how the number of allowable transactions changes from account to account so that you can upgrade when your books get busier.

3.         Can I access treasury management services? Should I?

Businesses that need merchant processing, wire transfers, ACH direct deposit, business online banking and similar services may need to be hooked up with a special deposit account. Fees for treasury management services are sometimes offset by the earnings credit available to customers with those accounts. It’s important to understand the accounting here, as sometimes simply switching to a different deposit account can make treasury management immediately more affordable.

If you’re unsure about the value of treasury management for your business, ask the bank to do a cost analysis for you. They should be able to make some recommendations based on your recent history—or for new businesses, your expected financial picture.

No decision fatigue here. 

At our bank, we like to keep things simple. We intentionally offer a small number of choices, so business owners don’t have to wring their hands over which account is best. Of course we don’t stop at the initial recommendation. Annual reviews are something all of our business customers can expect.

When we spot rapid expansion, we speak up, making sure our clients’ banking strategies stay in alignment with their growth.

And here’s the best part: When our recommendations include a switch to your different account type, the only thing that changes is your product. Your account number stays exactly the same, dramatically reducing the number of tasks an owner or finance team needs to take.

If we can help you get a new business account launched or get you switched from an overly complex system, get in touch with our treasury management team. I’ll set you up with Bank Iowa business relationship manager who knows what it takes to support a growing Iowa business.