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Small Business Banking - Not always easy....

Facilitating Transactions is not always easy.

First off, lets put things into perspective.....

I'm of the belief that our Banks offer services to its "Clients". The Grocery store has "Customers", so a difference exist between Client Vs. Customer OK?

Now, the next little concept is the "Know your Client" mantra. A Bank should know its clients; however, this day and age of branch-less banking it is becoming even more difficult to get to know your bankers and in turn, them knowing you. So, when something silly comes up and you plop yourself down in front of bank employees, they are caught a little off guard..... They don't know you and if you really represent what you say,.

How do banks make a profit? Well, ya, they take deposits and then lend the money out but it's a bit more involved then that cause you have to understand the "Bank Efficiency Ratio". So, the classical role of a bank is to efficiently manage funds. They need to build trust with their depositors and keep a good handle on who they lend money to.

All around, it is a professional relationship that is established or at least, it was at one point in time. How would one maintain a "Professional Relationship" in this day and age of technology?

In Canada, we have laws that govern different aspects of the Banking process. While they adhere to these laws, they also have "Industry Standards" and "Internal Policies". You know when you get a bank statement and with it comes an update to your terms and conditions for holding that account? A lot of that is them changing the banking contract they wish you to accept.

Ok, so.... Where's the story.... what's this blog about?

Trying to pick a bank to use is a task in itself and dependent upon each small business's needs. For Welshtown Haven Inc, our need was an inter provincial banking establishment, removing the Credit Unions from the list of options. Next on the qualification list was finding a bank not local to our host town of Shelburne Nova Scotia, for privacy reasons. The last qualification was to pick a bank other then the one we were currently doing personal banking with. Yes, the Canadian landscape for choices of Federal Banks is limited. Given the Town of Shelburne has two different banks represented, reduces the number. Dropping off yet a third due to it being the bank we perform our personal banking at, reduces the number even further.

So, why drop those three federally incorporated Banks? Is privacy really a big thing? Well, a few years ago while down in Shelburne, one of the tasks was to get a water test performed. Water sample taken, it needed to be sent in with a money order of $30 or something like that. Walking into the Bank Branch on Water Street, the teller told me I needed to open an account before the money order / draft could be facilitated. I inquired if in opening an account would they perform a credit check upon me? Response was affirmative. I had zero aspirations of opening an account; however, wanted that reply. I smiled and left that branch and fetched my money order / draft... whatever, from the Post Office. The water sample came back good, Iron and Manganese found in the water, we've now got an appropriate filtration system installed. Point is though, the locals have NO Business knowing someone's personal affairs. I've pulled credit checks on people in the past and know how invasive they are into a persons life. Why separate Personal and Business Banking? Kinda the same thing, it's a business / personal firewall. What happens in ones personal life should not cast a shadow over ones business affairs or vice versa. Yes, this all causes difficulties.  Establishing something new is always an uphill battle, Corporate Banking included but once established, convenient things to have.

Now, through my professional career, I had facilitate the role of an Application Developer and had the privilege of assisting in a number of different projects that our Federally Chartered Banks initiated over the years. Nothing special or spectacular, simple projects but systems related. In having these opportunities, it provided some insight as to how the "Back End" of our banking world operates; as well as, some of the bank specific system configurations that address a range of needs. Also, during this period, running a small corporation I had needed banking facilities. I'd chosen BMO then due to its product line up. Later, in my career, I'd had the opportunity to work upon their systems and was impressed on how they back in the 70's had configured Canada Wide Banking. What they'd done back then had served them well over the years; however, it also placed some business rules / bank policies upon them. They had regionalized their systems so, in turn customers could easily perform business within a region; however, holding an account from outside of a region proved more difficult, and at the time, unheard of.

Yes, Welshtown Haven did pick BMO. BMO is not represented in Shelburne; nor is it our management groups Personal Banking option. Due to past experience with the institution a degree of comfort existed and having some insight on how their systems work an added bonus.

So, it's a slam dunk, walk into a branch and open up a business account right? Nope, never that easy. Welshtown Haven Inc., is Provincially Incorporated in the Province of Nova Scotia. For us, Yarmouth Branch was the most "Local" to Shelburne leading it to be our "Home Branch". The Management team of Welshtown Haven do not live in Atlantic Canada so, walking into a local branch and having the Business Manager Open a Business Account for a Nova Scotia incorporated company was not possible. Yes, our local BMO Branch Business Banking professional did facilitate the opening of our account by working with the Yarmouth Branch. Big THANK YOU! When applying for a Corporate Credit Card, they were determined that a personal credit check was required. Yes, a number of extended phone calls took place and yes, in the end, a Corporate Credit Card was issued without being tied to the person. Yarmouth Branch, sadly have zero idea of who we are but they are our Home Branch.

Banking, up and running. Online Banking is working smooth and time passes. As a management group, we've ZERO need to walk into our local Bank Branch. Our Business Banking contact is blessed with Maternity Leave (extended at that) leaving Welshtown Haven management with ZERO contacts within our Local Branch.

So, think about this.... As a management group, you wish to do an odd business transaction. Your account Home Bank Branch is in a completely different processing region then where you live. The Bank Branch that has adopted and facilitates your business needs has no idea of who you are, what your business is.... Is this a scenario ripe for disaster?

Now we started this long blog out talking about "Customer" vs "Client". Banks are a service industry, serving banking clients. As part of the business model, they should validate there clients are who they say they are then validate the legitimacy of client transactions in the context of Canadian Law and Banking Regulations. Beyond that comes into play things like "FINTRAC". If you're gonna do something odd and raise red flags, expect one of a number of different types of professional groups (Banking, Real Estate, Lawyers...) to be required to fill out a FINTRAC report in the background. It really is all a convoluted cascade of events that happen in the background! For the most part, the customer is unaware of these requirements / responsibilities.

So, as a small business operator, I think the reader can start to see the importance in picking a Business Banking establishment that is capable of taking their responsibilities seriously?

Yes, Welshtown Haven Inc., has recently had to do some stuff. Yes, this convoluted mess exists but to be honest, it's not much more convoluted then many trying to get into business would face this day and age. The world has changed over the last 50 years. We live in a world of Virtual access. How did our adopted Host Bank perform?

Oh, My! 

Movement of any chunk of coin will require a FINTRAC report to be created in the background. Any suspicious activity, a FINTRAC transaction. Bouncing funds around IN then OUT of an account, a FINTRAC transaction. Depositing monies into an account never really is a problem. All Financial Institutions like this part; however, shoving it along to the next destination can be a problem and end up leading to more questions (and a possible "Hold" being put on the funds). Oh, and having a Bank Branch Management team sign off on "Know your Customer" documentation for a 3rd party, all things considered.... LOL....

Nothing is "Easy", always expect the unexpected. Always have a backup plan when trying to carry out a business transaction. Always allow for transactions to be protracted. Pick a Financial Institution that staffs local branches with capable competent but not overly authoritarian / militant / power hungry staff.

For Welshtown Haven Inc., picking BMO as our Small Business Banking establishment, so far so good. Yes, we've received the 3rd degree. The set of transactions to facilitate a business need for the most part complete. Knowing a bit about banking (we're no experts on this) and having a grasp of the "Work" involved, I'm impressed.

A big thing that is often overlooked is considering, how easy it would have been for a nefarious transaction to have been performed? Did the Branch Staff act responsibly to protect their clients? After going through the last few days, I'd think Welshtown Haven's management group are being looked after by BMO's Branch Policies, Procedures and assorted Staff. Good Job.


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