How to Reduce Your Practice’s Banking Fees
Have you checked lately how much banking fees you are being charged? The amount you pay per month for various banking services most likely is not large, but in this economy, it may be worth looking at. Amounts charged by the banks vary based on various situations, for example, the size of the practice and the characteristics of the banks that serve a particular area. Some fees, but not all, may be negotiated. The best person to contact to discuss your fees is your bank officer. You may also want to start shopping around for a better deal or just to see what other options exists. A good source to check on the rates bank charge is MyBankTracker.com. This site posts banks’ interest rates and customer reviews.
Before you contact your bank, consider the following questions:
- How many items will be deposited in a month (average)?
- What is the number of withdrawals per month (average)?
- Is there a fee for paper statements?
- Is there a monthly maintenance fee if a certain balance has to be maintained? If yes, is the fee determined at the end of the month?
- Is a fee charged if the balance dips below a certain level at any point during a 30-day period?
- Are there some services that you are paying for that you do not use or need?
Keep in mind that just paying a low monthly fee does not mean you are saving because banks could be charging for other monthly items. For example, many banks offer free small-business checking accounts. These have no monthly maintenance fees if a certain balance is maintained or other conditions are met. But the number of withdrawals or credits is usually limited. Any extra activity incurs a fee of 25 to 50 cents per item. Since medical practices tend to have a high number of transactions, this could add up quickly.
Some of the strategies to consider include linking accounts at the same institution. Bank account fees may be reduced if checking, savings, merchant (credit card) and various types of loan accounts are maintained at a single institution. These may also be linked so that the interest earned on a checking or savings account can pay for any fees.
While you are looking into your banking set-up, it is important to avoid mixing your business and personal accounts. Mixing business and personal funds in one account may look like a way to reduce fees, but most likely it will not pay off in the long run. Having a joint account can make it harder to figure out where the practice stands financially and may lead to trouble with the Internal Revenue Service.
While you are looking at your bank fees, it may also be a good time to look at your overall practice expenses. According to Medical Group Management Association, practice costs have increased more quickly than the consumer price index and Medicare payment rates. These cumulative percentage changes are based on the growth or decline of practice costs based on the cost per full-time equivalent (FTE) physician in 2001.
Note: Practices represent nonhospital, nonintegrated delivery service-owned multispecialty groups. Operating costs for 2011 are based on a three-year moving average projection of the previous year’s data. The CPI is based on the July semiannual figure.