Bank closures affect 1 in 7 small businesses
An estimated 350,000 small businesses across the UK have been affected by recent bank branch closures. According to research commissioned by PayPal, businesses reliant on taking cash and cheques are having to travel further to pay money in, taking valuable time that could otherwise be spent generating sales or managing the business.
The poll of 500 cash-taking businesses found that 1 in 7 of small businesses say their local bank branch has closed and relocated in the last few years, or will do so soon.
Northern areas of the UK, including Scotland, have been most affected by bank closures, with 1 in 5 affected. To make matters worse, a significantly higher percentage of businesses in the North of England and Scotland are reliant on cash (64% compared to the national average 56%).
However it’s not just those businesses that need to deposit cash and cheques that are affected. We’ve heard from online retailers for whom a branch closing meant the loss of their business bank manager and banking relationship. Once the local guy disappears, businesses end up talking to a faceless telephone banking service with no prior personal knowledge of the business. We’ve even heard of businesses who’s first contact with their bank after losing their bank manager has been for the bank to request a business plan be submitted.
Of course you should have a business plan anyway and keep it up to date, but if you’ve built up a personal relationship with your banking partners, for them to remove your local business manager and effectively treat you as a new comer is devastating to the business relationship.
Narik Patel, Director of Mobile Merchant Services at PayPal UK, says, “Losing your local bank branch has become all too common for many small business owners up and down the country”. He’s dead right, all businesses need financial support whether it be for loans and overdrafts to support growth or more mundane services like cashing cheques and depositing cash.
Technology can help, such as the PayPal Here app and Chip & PIN card reader which gives businesses the ability to accept card payments as an alternative to cash or cheque payments anywhere where there’s a WiFi or mobile signal. However nothing can replace a businesses relationship with a local business bank manager who’s familiar with your business.
Someone hundreds of miles away tapping numbers into a computer which then makes an automated yes or no decision just doesn’t take into account how a business is performing, especially when it’s a new style internet based business which don’t always operate by the same rules as more traditional offline ventures.
Have you been affected by bank closures? How is your bank supporting or hindering your business growth?
Funnily enough we have just purchased a recently closed down bank yesterday.(bonus lol )
Bank closures have not really effected us as most banking is done digitally. I would say its a minor inconvenience. It just one of those things you diversify and adapt.(oh and take advantage lol )
We are always looking for ways of being less reliant on ebay. I think nowadays many sellers are in the same boat. Any of our spare profit from ebay gets taken away and invested elsewhere.
We have always avoided using banks for loans or as a source for funding as they have far too many hoops they require us to jump through to get anywhere.
Many years ago I checked out the various Banks. I have a problem. Living in deepest Cornwall ALL the Banks are in the middle of towns. The closest is about 9 miles. All the towns are very badly affected by tourist traffic that makes a quick trip to the Bank all but impossible for a good part of the year.
But I found that several Banks will allow you to do the basics such as depositing cash and cheques and drawing cash and especially change through a local Post Office.
So check out to see if your Bank will allow you to use the local Post Office. In my case I have never in about 15 years of being with my current Bank had any problems with doing the necessary via the local Post Office.
Obviously most transactions are done digitally these days so it is only possibly a minority of transactions but if it allows you to continue trading without problems as well as giving your local Post Office more business it can only be a good thing.
If however you find that your current Bank will not allow you to operate via the local Post Office. Go into the local Post Office and have a chat with the Post Master who will probably be happy to tell you which Banks he can work with and what services are covered. Then if you do decide to change Banks you can go to one that works via the local Post Office. So if you need to deposit Cash and Cheques etc you are able to operate locally.
It is a pity that the post office is not able to process cheques (for other banks) acting only as a drop off point for them. This requires the use of pay in slips and envelopes making it more difficult for customers. This adds time to the transaction and has an untracked first stage.
This is a slight disadvantage. In my case I put the cheques(when I get one which is not that often these days) into an envelope(supplied by the Bank) with the paying in slip and hand it in to the Post Office. In exchange I get a receipt. I have been assured in the past that there is a deal between the Bank and the PO that the envelope will be delivered next day(Ist Class?).
If I want to deposit cash I have a card which the Post Master puts into the computer and the cash goes straight into my Bank account(used to be very useful years ago when I attended many Specialist Events and the business was mainly cash).
Where it is also very useful is that when I wanted change(I used to take about £50 change to an event) I had no problems getting it from the Post Office(A local Petrol Station once complained to me that the same PO refused to supply them with change because they were not a ‘customer’)
The alternative would have been a 9 mile(18 mile round trip) into a nearby town and then trying to find a Parking Space rather than a 4 mile trip into the nearby Village to their Post Office where parking was outside the front door.
So if you have the same problem that I had it could very well make a great deal of sense to work via the local Post Office.