Why Fast-Growing Companies Switch Business Accounts Early

Fast-growing companies switch their business accounts relatively early when they don't have to, and it's not a bad thing. In fact, when a company is flourishing in all other areas, its executives figure, if it ain't broke, don't fix it.

Yet those in the most proactive situations, as business owners, understand what those who don't project don't: a current run of banking operations will positively or negatively impact growth potential down the line.

Companies that wait until they absolutely need to switch aren't in crisis mode. They're responsive instead of preemptive.

Yet those who switch take their infrastructure needs into account, and they benefit more over time as growth surges.

Jump to:

• Understanding Limitations Before They Occur
• Systems Integration Takes Time
• Transaction Totals Surprise Everyone
• Team Access Gets Complicated
• Cash Flow Assessment Gets Challenging
• 🤖 Looking For An Answer?
• Software Systems Become Important
• Timing Complicates Things
• What They Look For When Switching Early
• When Is Too Early to Switch?
• What It All Means

Understanding Limitations Before They Occur

Proactive business owners know where they're going and don't wait until the last minute to make a change. Instead, they take stock of their positioning and bank requirements as they expand.

Sure, a business may not have 500 transactions a month at this point, but with 20% month-over-month growth, the end of the quarter will bring 1,500 transactions.

If they wait until the last minute, switching involves applications, approvals and payment system changes.

By the time they hit their limits, they've been stuck with months of limitations in the interim while switching. 

The best business account options are expansive and aligned with infrastructure needs from the outset, with plenty of flexibility rather than forced upgrades or changes midway through or late in the expansion. Those who switch see this and do it while there's still time.

Systems Integration Takes Time

Integration gets overwhelming fast. After years of companies using their business accounts, linked credit cards, payment processors, accounting software, payroll services, and invoicing platforms, the systems integrate seamlessly.

But over time, integration makes switching exponentially complex as companies grow and acquire more systems.

It's one thing to switch when integration involves three; it's another when it's fifteen.

Fast-growing companies often start with new programs as they scale; when their business bank account doesn't integrate well with the software they onboard later, it's easier to ignore friction than to ensure everything works properly.

Switching banks for the better can facilitate better integration from the start, systems that play well with a company's needs rather than simply what it has.

Transaction Totals Surprise Everyone

Growth is more than revenue; it's also how many transactions enter and exit a company. More customers mean more payments in; more sales mean more payments out to vendors, and payroll distributions increase.

Thus, there is no one-to-one relationship between revenue growth and transaction volume, so companies need to catch up.

This isn't shocking; it makes sense when for every twofold revenue potential, transaction volume spikes three or four times. More independent purchases as opposed to purchases en masse. 

Therefore, while conventional accounts have a maximum of 200 or 500 free transactions before fees kick in, companies that wait until the end incur $100s in excess fees because they had no other choice during the switch.

Team Access Gets Complicated

Those who start with access at small companies need internal access for teams, from bookkeeping to accounting needs, to visibility into transactions, or cash capabilities.

Bookkeepers and controllers need access; department heads may need approved vendors for necessary invoices to be paid too.

Basic business accounts are not set up for these limits; however, the number of users that can be created with minuscule permission levels is minuscule. Either users can see everything and move funds, or they can't see anything, which reduces time spent on business funds.

Companies need granular control. Thus, earlier switching helps them establish systems with appropriate user management that promote best practices along the way throughout growth.

Cash Flow Assessment Gets Challenging

When revenues are low, general cash management is simple; when cash flow spikes, timing becomes imperative. It's one thing to delay ten bucks for a day or two; it's another to lose thousands in the cash flow cycle.

Growing companies often start implementing cash flow management best practices. They may separate operating funds into one account and tax savings plans into another; they may maintain another cash buffer while using lines of credit for operational needs, or reverse pay responsibilities based on receipts.

Basic banking does not support this advanced cash-flow potential. Still, professionals with nuanced business accounts can access automated sweeps that monitor each savings account with bank awareness across multiple accounts from a cash-flow perspective, as well as credit lines tied to checking accounts.

Software Systems Become Important

As companies grow, some software becomes necessary instead of optional. Expense reports need real-time reporting; back-and-forth payments require automated reconciliations; invoicing systems must integrate; sophisticated reporting is emerging.

While these are 10x better with business accounts aligned with company needs, manual entries remain the norm until then, and they can become problematic.

A company doing fifty transactions a month can keep up. A company doing five hundred transactions a month cannot.

Banks offer varying levels of compatibility with systems; some integrations are seamless, while others introduce significant friction. 

Companies that switch early evaluate banks that work well with paid professionals rather than the plans they've used to date.

Timing Complicates Things

When a company switches its business accounts, it's not just filling out forms. It's having to reroute direct deposits, redirect payment processors for updated credit information, obtaining customer payments while having vendors direct goods elsewhere; it's having to revamp accounting software so it's a coordinated effort for everything in between that helps ensure nothing gets broken along the way.

For small mom-and-pop operations, this might take an hour. For large, growing entities, this could require manual tracking of routine payments over days or weeks, and there are opportunity costs when time isn't devoted to production.

Any time spent switching bank accounts is an opportunity cost that could be better used elsewhere, provided it makes sense later. 

Thus, companies that switch now, while they're still small, make these transitions easier by reducing stress before moving on.

What They Look For When Switching Early

Companies that are willing to change when needed look for similar criteria: accounts that lend high transaction volumes with no fees; integrations preferred by established business software; versatile user management systems; sophisticated cash management advantages; and customer service responsiveness without associated fees for reputable communication.

They're not looking for cheaper solutions per se, but rather those options that won't become limitations, but support for growth instead of restrictions.

When Is Too Early to Switch?

There's no universally optimal early time to switch, but relative criteria exist.

If transaction volume exceeds the maximum capacity by 50% or more in this current range, it's time to reevaluate options. If new options come into play but are not compatible with current banking procedures, it's time. If excess user management complicates others' access, it's time.

The common thread among the points above is proactive mindfulness: waiting until restrictions are in place to respond means allowing those problems to persist during structural changes, which could have been avoided with better foresight along the way.

What It All Means

Companies that experience rapid growth switch their banking accounts early because they realise that structuring banking can either foster or hinder growth potential.

Therefore, it's better off switching when things are easy relative instead of waiting until it's too complicated, bad news, where sub-optimal offerings become problematic within constraints.

It's not a requirement for optimal banking. Still, proactive awareness that current business support isn't aligned with where they're heading, and finding alternative plans before implementing detrimental changes, serves everyone best over time, once things are settled into a stable solution without stress and are responsible for change.

Those who made the change early often say it was one of the best operational decisions, even if it seems premature in hindsight.