Everyone hates bank fees and becomes solely focused on avoiding them. Bank fees are seen as a non-value added business expense and the least desirable of all expenses. Business owners and individuals alike typically use fee avoidance when choosing a bank and a bank account. This one dimensional decision making requires a little paradigm shifting. Choosing a bank with higher fees and more fees may be the best value when Invisible Expenses™ are factored in. 

Free Checking

As always we have to distinguish between the mindset of an individual employee and an entrepreneur focused on business. For example, Mary, the employee, hears an ad for Rinky Dink Bank free personal checking accounts. She gave in to the sign up bonus and the lure of no fees. Mary only needs one bank account for her direct deposit and personal expenses and she has no interest in personal accounting or financial planning. She runs a simple life and all is good in her world. This blog is not about all the Marys it's about business.

Addiction

In contrast, Bill owns Paradigm Consulting, Inc., a professional services firm, and New Age Investors, LP, a real estate investment partnership. He needs at least three bank accounts including a personal account and a business account for each business entity. Coincidently, Bill opened bank accounts at Rinky Dink Bank because they also offered free business checking accounts. Bill is addicted to avoiding bank fees, also known as Bank Fee Avoidance Addiction, so he couldn't resist the offer. 

The Impact

Bill eagerly proceeds to create online profiles for the new accounts. He was irked to learn personal and business accounts can’t be linked in one online profile forcing him to create three login credentials. Bill can't make transfers to or from his business and personal account when he needs the cash instantly. He can either use Rinky Dink's bill pay feature adding a 7-day wait or the ACH service which is faster but comes with fees.  Unfortunately, Bill's Bank Fee Avoidance Addiction™ is so severe he never considered the more important factors in a banking relationship. 

King

Every entrepreneur knows cash is king. When resources are needed and bills have to be paid you use cash from wherever you can which includes transferring money from one bank account to another quite frequently. What's the cost of not being able to use your own cash when you need it yesterday? This is the cost of headaches or the value of not having headaches. 

Roll Forward

Paradigm Consulting, Inc. customers and New Age Investors, LLC tenants pay by check into the respective business bank accounts. Bill hasn't yet discovered the power of virtual bookkeeping services so he defers bookkeeping and accounting into a high stress tax time activity. He scrambled to complete tax returns including dissecting bank deposits by customer, loans and other sources. Rinky Dink Bank doesn't show any online deposit detail and Bill never kept a record of deposits so he went ballistic over the online portal and his own slackness. 

Triple Headache

Bill's biggest banking headache was more painful than fumbling with deposit details. Being shocked understates the moment when Bill realized Rinky Dink only keeps 3 months of online transactions. He started work on tax year 2015 two weeks before the extended deadline of September 15, 2016, so now he has to enter 17 months of transactions manually. Bill tripled his bookkeeping and tax workload by getting hung up on Bank Fee Avoidance Addiction™. He was focused on free checking instead of features of the bank's online platform.

Subscription Mindset

Entrepreneurs happily pay for monthly subscriptions to Dropbox, QuickBooks and Bill.com without hesitation. Folks think all banks are the same so they pick the bank without fees. Instead banks are just another technology play and monthly banks fees are really subscription fees. Focusing on free checking of feeless banking is like trying to get QuickBooks online for free. Online banking is all about the features and never about the fees. If you want the technology, then you have to pay for it. Bill is now crystal clear how Bank Fee Avoidance Addiction™ gives rise to Invisible Expenses™, the ones you don't know about that are killing your profits. 

Technology

Look for these 7 critical technology features when choosing your bank:

1) Download transactions for previous 12 months or longer (3 months or less is unacceptable)

2) Bank statement pdf's available for 12 months or longer. 

3) Link personal and multiple business accounts in same online profile.

4) Deposit details including a pdf of front & back of all checks received and deposit slips

5) Check details including a pdf of front & back of all checks written

6) Bank statements include the check images in #5 

7) Pay as you go for ACH transactions (Big monthly fees are unacceptable)

Paradigm Shift

Bill's banking experience with Rinky Dink Bank was so painful he closed his accounts and eagerly paid $18 per month for each business account at Big Time Bank. He now has all of the 7 critical technology features and none of the Invisible Expenses™ arising from Rinky Dink's featureless online banking. Bill hates doing bookkeeping and taxes and finally gets the power of virtual bookkeeping services by invizibiz.biz. When are you going to make the shift?

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