Bank cash handling fee - about to kill my business

Aryzel2

Hi all,

Hope you can help me, my sole trader business is high volume but low profit margin, 3.5% roughly, its not a big income but its enough and I enjoy it.

Previously I've being logging the takings into a business deposit account and transferring them to my business current account, BoI had no problem with this for the last 25 years, however now they are saying they are going to stop me from doing that from 31st Jan and will now be charged the 0.48% on cash lodgements. This will basically mean they are going to tax me 16% of my income every year.... I can possibly go to AIB and change the way I lodge a bit in order to get a slightly better rate, but I'd still be losing 10% of my income each year. For various reasons I can't pass on the charge to my customers, so I'm going to have to take the hit.

How have other people dealt with this? Or is there even a way to deal with it, or am I just going to have to accept that the banks can get away with taking 10-16% of my income? Things are very tight at the moment, I'm not sure I'll be able to keep going with the business if I can't find a viable solution soon.

PhatPiggins

Do BOI charge you to lodge cash into their business accounts? (I've never been a customer)

Sorry I'm presuming your takings are in cash, is this correct?

mathepac

The reality is that the banks are determined to eliminate cash transactions and cash completely as they see handling it as people intensive, expensive logistically and a security risk.

Can you "sell" / exchange bagged coin for notes to retailers in your locality? Can you lodge notes to Post Office Account / Credit Union and lodge drafts to you business account(s)?

Aryzel2

@PhatPiggins: all the banks charge around 0.5% for lodging notes. 2% for coins.

@mathepac: I rotate the coins back out for notes, but its the notes I need to lodge, no way to eliminate cash/notes from my business, not for many more years anyways.

PhatPiggins

Aryzel2 wrote: »

@PhatPiggins: all the banks charge around 0.5% for lodging notes. 2% for coins.

@mathepac: I rotate the coins back out for notes, but its the notes I need to lodge, no way to eliminate cash/notes from my business, not for many more years anyways.

I know I'm not helping you at all but are you lodging coins into your savings account, withdrawing in notes and then lodging the notes into your business account?

mathepac

PhatPiggins wrote: »

I know I'm not helping you at all but are you lodging coins into your savings account, withdrawing in notes and then lodging the notes into your business account?

already answered - see above

daltonmd

Aryzel2 wrote: »

Hi all,

Hope you can help me, my sole trader business is high volume but low profit margin, 3.5% roughly, its not a big income but its enough and I enjoy it.

Previously I've being logging the takings into a savings account and trasferring them to my business account, BoI had no problem with this for the last 20 years, however now they are saying they are going to stop me from doing that from 31st Jan and will now be charged the 0.48% on cash lodgements. This will basically mean they are going to tax me 16% of my income every year.... I can possibly go to AIB and change the way I lodge a bit in order to get a slightly better rate, but I'd still be losing 10% of my income each year. For various reasons I can't pass on the charge to my customers, so I'm going to have to take the hit.

How have other people dealt with this? Or is there even a way to deal with it, or am I just going to have to accept that the banks can get away with taking 10-16% of my income? Things are very tight at the moment, I'm not sure I'll be able to keep going with the business if I can't find a viable solution soon.

Could you opt for a standard current account instead of the savings one?

"Savings on Current Account Transaction Fees
Choose the Flat Fee option - If you’re on our Standard
Personal Current Account and carry out more than 40
transactions in a quarter, the Flat Fee option is a better
option for you. For details, please see page 7.
Get free transactions - If you keep at least €3,000 in your
current account for an entire quarter or lodge at least €3,000
in your Personal Current account and make at least nine
debit payments from the account using Bank of Ireland
365 during the quarter, you qualify for free current account
transaction fees for that quarter. For details please see
page 7. "

On Page 7 it says:

"Free Transaction Offer
From the fee quarter starting 21st February 2011, you
can automatically qualify for free quarterly current account
transaction fees if you, over the course of a fee quarter:
• Lodge

at least €3,000 to your Personal Current Account
AND
• Make at least 9 debit payments
5
from that account using
Bank of Ireland 365 Phone and/or Online
(This is the equivalent of €1,000 net wages/salary lodgements per
month and 3 debit payments from the account per month.)
OR
• Maintain a minimum credit balance of €3,000 in your current
account throughout the full fee quarter
6
If you qualify for this offer, this means you will not be charged
28c for each transaction or €11.40 account transaction fees
for that fee quarter."

Not sure if you can do something with that, but I recall a guy in the UK being charged for not using his account enough, the way around it was that he set up a DD of one pound from his business account to his personal account a couple of times a month.

I'd also consider going to the Ombudsman - fkn banks are like leaches...

Aryzel2

@daltonmd: thanks for the reply and looking up details, I've had a look at that too, there are a few options like that but I'd like to hear if anyone else has gone through the process for their own business

One idea I'm considering is if I could get a business credit card, lodge the money to that and pay supplies with the credit card, (assuming they will accept payments by credit card)

ScouseMouse

I got stiffed like this by ulster bank. They forgot they offered me half price banking so I pocketed the cash and lasered it back by the thousand - until card services copped it. "you cannot use your own cards in the terminal". It's to stop a chargeback stiffing them.

So I now pay everyone cash. I don't lodge just to write a chq to take it out again. I sometimes lodge it into my personal account then take it out by draft , much much cheaper. Am still looking for other ways and will watch this thread closely.

antoinolachtnai

It really does cost a lot for the bank to run a branch, handle and accept lodgments. I am guessing you are lodging in the region of .5m to 1.5m a year. That is just a lot of cash. It looks very unlikely that any bank is going to let you run that out of a free personal account. Lots of people will argue with this and say that the banks are making a fortune. That was true once, but it simply isn't true anymore. The big-2 banks are barely solvent and wholly dependent on external capital, and the others are all severely challenged and dependent on the support of their parents.

Do you have any finance facilities with the bank? If you don't, it really isn't worth the bank's while to deal with you under the arrangements at present. To make you a profitable customer, they need to get some sort of lodgment fee from you. They used to be able to carry unprofitable customers, because they were raking it in on lending. But that margin isn't there anymore for them.

The irony is that they are basically under the same sort of pressure that you are.

Idea of paying out of cash might work for you, if you are dealing with that type of supplier.

Would an on-site ATM be any good for you to dispense out some of the cash? This might help a little bit.

Are you doing some sort of business where the money has to be lodged to the bank in order to be lodged with your supplier?

There are possible business resolutions to this sort of situation too, essentially by increasing the customer value and the overall margin. You obviously must have quite a lot of customers and transactions.

mathepac

antoinolachtnai wrote: »

... Would an on-site ATM be any good for you to dispense out some of the cash? This might help a little bit.

Are you doing some sort of business where the money has to be lodged to the bank in order to be lodged with your supplier? ...

I would hazard a guess that OP has some kind of vending machine business, with installations in pubs, restaurants, hotels, etc.

antoinolachtnai

If that were the case, then I'd suggest adding higher margin products and increasing prices, because this is a convenience product that can bear some premium. However, I suspect it's an even tighter business that the OP is in.

Aryzel2

@antoinolachtnai: thanks for the replys, I understand the situation the banks are in, however there is no way they can justify a percentage based fee on lodgements as a handling cost, it doesn't make any sense that lodging 10000 euro costs 10 times as much effort as lodging 1000 euro. If it was a flat fee, even if it was high, then i'd be more accepting of it, but a percentage fee is just robbery.

mathpac was more or less correct in his guess, and unfortunately its not very viable to change products or increase prices. It comes back to the fact that a percentage based fee is a killer for a small margin business.

Thinking now of talking to local credit union, see if its possible to lodge with them and take a draft/check every week or two to the bank.

mathepac

Aryzel2 wrote: »

...
Thinking now of talking to local credit union, see if its possible to lodge with them and take a draft/check every week or two to the bank.

Just check first where the CU's bank accounts are.

antoinolachtnai

The credit union will probably not be interested in handling your lodgments. It is just creating a headache for them. They probably don't even have a note counting machine. they never pay cash out.

You could ask G4S (cash in transit company) if they Would do any better. They have cash handling facilities. You could also find out who is handling the cash operations for the Tote. They have regular cash requirements. That company will be in the best position to accept your cash, after the banks.

You may not like the fees, but this is a typical enough rate. There might not be much handling in notes, but there is a lot of risk. The more you handle, the bigger the risk per euro comes.

I used to put my coin lodgements (about 800k/year) through a Partner company that had around 7m financed with the local bank. This cost .5 percent. This was probably as good a deal as could be done.

I think you really need to increase the margin, by diversifying if necessary. Another option might be to join forces with a competitor or a similar business to lower costs.

I would talk to your upline suppliers too for their views.

cfeeneyinterior

Why not lodge the cash to your own personal bank account and then use 365 online to flick it over to your business account. BoI used to give 50% off to us on lodgements but stopped it a while back because...... because they could. SO said F that and now lodge it into personal account and move it over once back at the business/computer.
If they notice; say no problem, open AIB personal and do the same thing. How can they complain when they won't actually have to touch/count any cash for us. Thats my thinking on it and we've saved 1000's to date. Use Business online banking too as much as you can ~ no cheques fees / postal stamp except around 20c I think per transaction and €15 pm.
If someone thinks this is wrong let me know...
Try it maybe but I suppose they are on to you already.

ScouseMouse

My only concern on doing the personal account thing is when the bank sees what you are doing, they can decide you are not using it for personal terms but business terms. Then they hit you with the same bank charges.

I was lodging thousands every week into my personal accounts and then lasering the cash into the business.

My account - wifes account - my other account.

Three accounts, three cards, but then the fraud dept queried the milking of the cards. Stop or we put a hold on the payments for 6 months. That will affect your cashflow.

So I stopped.

Ulster Bank offered me half price banking if I used Fastcash, (drop it in a special envelope and it goes to a central counting office) but they "dont remember" offering me this now.

Is it notes or coin you have?

HellFireClub

mathepac wrote: »

The reality is that the banks are determined to eliminate cash transactions and cash completely as they see handling it as people intensive, expensive logistically and a security risk.

Can you "sell" / exchange bagged coin for notes to retailers in your locality? Can you lodge notes to Post Office Account / Credit Union and lodge drafts to you business account(s)?

I hear ya, but they are going about it a funny way when they are charging merchants 2-3% for processing on-line payments!

I have a mad situation in my online business where I can deliver any order nationwide for under 5 Euro, but it could, in theory, (depending on the transaction value), cost me 4 times that amount to process the payment I take if it is a Visa Credit or a MasterCard...

These filthy c*nts in the banks are screwing small business people with hidden account charges, and if they are trying to "un-incentivise" the circulation of cash as an asset risk, they are going about it in a very funny way by putting a saddle on businesses that trade online with 2-3% handling charges.

EDIT: As for a solution OP, can you pay your suppliers in cash??? If you can, don't lodge your cash at all, hide it, or put in the post office, (where it'll be fully secure), and access it when you need to, to pay your suppliers in cash. There are loads of ways you can get out of letting these putrid c*nts bleed your business dry.

J.Ryan

Get a lodgement book for each of your suppliers and lodge the money directly into their bank accounts, ditto for any staff you have. will save a bit on the transaction fees.


Sound out other banks, if you are in a positive cash position they may be prepared to make you an acceptable offer.

Cianos

Are there any bigger vending machine companies that would be interested in taking your coins for an agreed amount every couple of weeks?

DubTony

A few years ago I used An Post's business lodgement service. I lodged all my cash in the local post office (reducing the amount they needed to have delivered) and they transferred electronically to my bank account. There was a flat fee at the time, but I can't remember what it was. But it was a lot cheaper than lodging to the bank; obviously. I should add that this was for notes only as my business needed to buy coins from the bank, which was charged at the same rate as lodging coins (0.45% at the time)

Talk to your local postmaster and he can point you in the right direction.

maxer68

FFS everyone NEGOTIATE!

Banks are a business and they have their "rate card" and then they have their rates.

Look at ways that make it easier for them and less handling and then look for a lower rate.

My cash lodgements are less than €1m a year and I pay 0.25% with Ulster. - BUT, I will allow them count it off site (I use night safe), I have all notes facing up and in correct size bundles (5k x €50, 2k x €20, 1k x €10 etc). All dog ears and fold flattened and tied with the relavant paper band.

That way they save on handling cost and you negotiate a better fee.

And if your current bank won't do it, another one will (if you have loan facilities with current bank, just open a second account in bank 2 for cash lodgements)

Also helps if you have your credit cards service with them as they look at the total amount they are earning from you.

maxer68

Cianos wrote: »

Are there any bigger vending machine companies that would be interested in taking your coins for an agreed amount every couple of weeks?

A busy pub would love to do that!