How to Find Banks That Support Profit First
Sabrina Pelech, Profit Catalyzer
9 MIN READ
Profit First is a tried and true system with over 100,000 companies having implemented the profit first method and the most common question is “What bank should I use for Profit First?” Here is the simple answer:
You want to work with a bank that does not charge minimum balance fees on checking or savings accounts.
Which leads to “How do I find that bank?”
Consider Your Existing Bank
Why go through the process of switching banks if you don’t have to? Start by evaluating your existing bank and review your current accounts. Talk to your banker and tell them you would like to set up additional checking and savings accounts. But, before setting up the accounts ask them if there are any minimum balance fees for the new (or existing) accounts.
“I believe Profit First is successful because of three characteristics: Intention, Allocation, and Organization. If we can make sure we carry these forward, we can make a system that works for us!.”
If your existing bank does not have a minimum balance fee:
Congratulations, you already have a bank that is likely a good fit for Profit First. Since you are already talking to your banker, explain that you want to save more money at the bank, you know, like profit, and to do this you will need to transfer money between accounts often bringing zero-dollar balances to certain accounts. which is why no minimum balance fees are important. It could also be helpful if your banker is aware of the profit first system and the reason in which you choose to implement it.
Once your banker is up to speed it is time to set up your five foundational accounts. Your income, profit, owners Compensation, Tax, and Operating Expense Accounts in order to start the implementation process. Checkout our blog on Blog – What is Profit First Chiro to download our getting started check list.
If your existing bank does have a minimum balance fee:
Explain that you are looking to save more money at the bank (you know, like profit) and to do this it will be necessary for you to transfer money from account to account often bringing zero-dollar balances to certain accounts.
Then ask if they are willing to waive their fees.
If they are not willing to waive their fees, that (in my opinion) is a strong indicator of how interested they are in your business and in supporting you. And it is a strong indicator that you need to find a new bank.
Finding a New Bank
A great place to start your search for a new bank is to look at Community Banks and Credit Unions. These are some of the top choices of Businesses who implement Profit First because they don’t charge minimum balance fees, in many cases they offer more advanced technology packages to make banking easier than their large institution counterparts. Community banks also tend to have the most secure banking platforms, and are better equipped to support small business.
In fact, here at Profit First Chiro we work with a small community bank and have multiple accounts set up there for our business. No fees, no problems. Another great benefit from community banks is the personalized attention, albeit I get an occasional (fun-loving) eye roll from Janice when I go to the bank to set up another account, but they understand the system i have implemented and are very supportive (not always common at larger banks.)
Here is a great tool to find a community bank near you:
ICBA Bank Locator
Here is a great tool to find a credit union near you:
NCUA Credit Union Locator
Switching to a New Bank
Don’t get overwhelmed, I know the prospect of moving to a new bank can seem daunting. If you follow the steps below it can be an easy and painless process and remember you don’t need to do it all at once.
Here’s how to make switching banks painless:
1. Once you locate a new credit union or community bank that doesn’t charge minimum balance fees and allows unlimited (or at least 10) checking/savings accounts, set up the initial accounts.
2. Minimally, request three checking accounts for Income, Owners Comp and OpEx. You can add additional accounts later for advanced Profit First techniques, but this will get you started.
3. Minimally, request two savings accounts for Profit and Tax.
4. With the accounts setup up, you are ready for the transfer from your old stodgy bank to your new Profit First bank.
5. Don’t close the accounts at the old bank just yet.
6. Start the transfer by putting new check deposits into the Income account at your new Profit First bank.
7. Then set up the transfers for any other types of deposits to your Income account at the new bank. This may include credit card receipts, wire or ACH transfers, or transfer from payment processors like PayPal.
8. With the money now flowing into your new bank/credit union, you will naturally start to pay bills from that bank and follow the Profit First process.
9. As your bank accounts dwindle at your old fee charging bank, be sure to stop all vendor payments and all deposits from going to that bank. Once the cash flow at the old bank is stopped, shut down the accounts, and transfer all the remaining money from that bank to your new Profit First bank.
Remember its always helpful to have the bank on your side, who supports you and understands what you are trying to achieve. I realize this may take a few hours of your time over a few days to get initially set up, but don’t let that dissuade you. I mean, you want to be profitable right?
Don’t Let Them Lie to You
Don’t let a banker tell you that Profit First won’t work for you.
It might sound crazy but some bankers hear about the Profit First method immediately think “That is too complicated.” or “That won’t work.” But that is an argument from ignorance. Ask them if they have ever used profit first or have worked with any clients that have used it and chances are they will say no. Which is why they just assume it won’t work. If they don’t know and can’t rely on previous success stories then it is in their best interest, not yours, to tell you it won’t work.
Surprisingly, bankers don’t like to change, they have a system, a process, and speech they have prepared for their clients and right now you don’t fit into that pre-made mold. So rather than trying to understand what you are doing and why they just tell you to follow their method. Why? because then they don’t have to change making it easier for them.
Don’t give in, explain to the banker what you are doing and why. If they won’t listen find a new banker. Taking advice from someone who has never implemented or tried the Profit First System before, while they may mean well, they don’t have the practical experience needed to give you “advice” so trying to discourage you is in their best interest and not yours. Remember, Profit First is about you. We are about to make you permanently profitable, and having the right bank is where to start!
Download our Profit First Chiro Switching Banks guide to get started today!