A question about company bank accounts

[camerafodder]

A supplier of ours (a good one) has been struggling with his bank for some time now and they have finally asked him to bank elsewhere. He has been given a few weeks notice by the bank but does not want to give them any more of his business. His company is a ltd company and he has asked us if we can pay into his personal bank account instead of his company one. I know his background and have dealt with him for many years. There is a complete papertrail etc... so I have no personal problem with this but are there any legal implications?

 

[timskemp]

As long as his invoices are showing the bank details you are paying to, or he sends you written notification of change of payment details I wouldn't have a problem doing this.

For a while after a previous business collapse none of the big banks would give me a business account on decent terms so I used a personal account for all my business banking for a few years. No one I worked with had a problem with that.

 

[corned]

What a wunch of bankers.

I doubt there are any legal implication for you as a customer. You receive an invoice and settle it. As long as your supplier ties the two together then you are in the clear.

It will very likely get rather messy for your supplier though. HMRC will raise their eyebrows I'm sure if they get wind of it, and their accountants will need to make some detailed notes on the year's accounts to explain it all away. There may be all kinds of BIK and Director's Loan kind of implications of company money is being paid into a Director's bank account.

An interesting one!

Business banking is, from my experience, a nightmare. They are *******s all. A more unhelpful kind of organisation you could not hope to meet. ...And we've got a good track record!

 

[markjay]

Agree with comments above. The problem, if any, will be the supplier's, not yours.

In fact the only potential issue you could be facing under these circumstances is with the supplier's Limited company - I.e if the company goes bust then the administrators/liquidators appointed by the bank could chase you for payments you have already made (albeit to supplier's personal bank account) as the company books may have no record of you having settled the invoices.

For this reason - as already stated by others - you would want to have written instructions on the supplier's company letterhead paper with the details of where the payment should go to. This will provide you with legal cover in case you are chased for the same payment again.

 

[jonnyboy]

I agree with the above, get some written proof or ensure his invoices say the bank details to pay in to.

The one piece of advice I would offer is (and believe me, i know all about "difficult" business bankers ) :-

Business banking isn't free. Therefore his bank are charging him for their services. So as long as he pays the charges then everyone should be happy. You say that they want rid of him as a customer, it's not him leaving them due to excessive charges or poor service, they don't want him as a paying customer any longer. Your long standing relationship or not, I would be very very concerned. Why on earth would they get rid of him ??????? Something doesn't add up here. It all sounds strange. I would hazard a guess that it's more likely he is going ooverdrawn, bouncing cheques or whatever and thats why they have asked him to close his account. Why else would they????

Remember, there really are NO friends in business.

Beware.

 

[markjay]

I agree with the above, get some written proof or ensure his invoices say the bank details to pay in to.

The one piece of advice I would offer is (and believe me, i know all about "difficult" business bankers ) :-

Business banking isn't free. Therefore his bank are charging him for their services. So as long as he pays the charges then everyone should be happy. You say that they want rid of him as a customer, it's not him leaving them due to excessive charges or poor service, they don't want him as a paying customer any longer. Your long standing relationship or not, I would be very very concerned. Why on earth would they get rid of him ??????? Something doesn't add up here. It all sounds strange. I would hazard a guess that it's more likely he is going ooverdrawn, bouncing cheques or whatever and thats why they have asked him to close his account. Why else would they????

Remember, there really are NO friends in business.

Beware.

Banks charge (quite a lot... ) for overdrawn accounts and bounced cheques... this by itself is no reason to kick him out. In most cases disagreements with the bank stem from the bank's refusal to customer's demands (this often happens even if the demand may seem perfectly reasonable to the impartial observer...). This causes disagreement and the customer may view this as 'the bank does not want my business'.

But the bank is not likely to kick out a customer, even one who's financial affairs are not in order - remember, the banks make more money on the back of those taking-out loans and over-drafts then those in the black. The only exception is when fraud - or suspected fraud - is involved, e.g. money laundering etc.

 

[iscaboy]

You're really asking two questions.

1/ Provided YOUR paper trail is 100% above board and water tight, eg any changes in banking / vat / address are reflected accurately in the Invoicing, AND IN A LETTER FROM YOUR SUPPLIER which you dutifully file and keep, then you have no problems whatsoever.

The one to watch here is the VAT / C&E, if at some future time HE gets investigated by the revenue men you want to be pure as driven snow with 100% complete, correct and cover your ass paperwork.

2/ Your second (non-verbalised) question is more interesting.

Banks are businesses, nothing more, nothing less, some are run better than others, blah blah blah, but from what you are saying, his bank NO LONGER WANTS HIM AS A CUSTOMER, and if that is so alarm bells should be ringing.

You have, in effect, been warned, in legal terms, about this person, if he gets done for carousel VAT fraud or false accounting or even simply disappears with a load of cash, YOU CANNOT ACT SURPRISED, you have been warned.

Nor can you get "burnt", you have been warned, so that would be incompetence on your part at best.

As other's have said, it can be a right pain in the ass to set up a new bank account, especially a business account, but keeping an account going on good terms with the bank is as simple as not writing dud cheques and always paying the charges. That is all banks ask.

Currently I don't have any money, so I send in null VAT returns and my business bank account just sits there with enough of a balance to cover the monthly costs, and my bank (and the C&E) are quite happy with me... even though I have no money... did you get that point?

Just in case you didn't, I have no money, and my bank is happy with me. I actually have an overdraft facility on my private account (same bank) which I am using, and a business credit card which has around £600 owing on it as I type, last week I lost my wallet, and my bank were quite happy to issue me a new debit card for my private account, a new debit card for my business account, and a new credit card for my business account. (I will not have an overdraft facility on a business account, and I will not use a credit card on a personal account)

A complete lack of assets does not make a bank unhappy, a complete lack of liabilities does not in itself make a bank happy.

Now, having exposed myself...

Your supplier's change of banking facilities means that your relationship with them HAS ALREADY CHANGED.

YOU, must now change your terms with your supplier to reflect this, and I would suggest that in addition to full paperwork that your terms must be Cash On Delivery.

and start looking for a new supplier, while the pressure is off....

Now, where shall I send the consultancy invoice for £500.00?
(because perhaps if you pay hard cash for advice you will actually listen to it and act on it within 24 hours...)

 

[jonnyboy]

Now, where shall I send the consultancy invoice for £500.00?
(because perhaps if you pay hard cash for advice you will actually listen to it and act on it within 24 hours...)
[/COLOR]

Oi ! Theres a queue - I got in with the warning first lolol

 

[219]

Is the answer not as simple as paying your supplier by cheque , made payable to his company ?

It is then up to him to decide which account the cheque is paid into .

 

[iscaboy]

Oi ! Theres a queue - I got in with the warning first lolol

Yeah, but you didn't say anything about a fee for your services..

 

[markjay]

Yeah, but you didn't say anything about a fee for your services..

This is because a Gentleman does not discuss money

 

[iscaboy]

This is because a Gentleman does not discuss money

so, first you don't bill the OP for your services, now you insult him by saying he isn't a gentleman for discussing money...

I feel that my tender is looking increasingly attractive to the OP :bannana:

 

[markjay]

so, first you don't bill the OP for your services, now you insult him by saying he isn't a gentleman for discussing money...

I feel that my tender is looking increasingly attractive to the OP :bannana:

Insult then bill... seem to be a common way of doing business round where I live

 

[iscaboy]

Insult then bill... seem to be a common way of doing business round where I live

Ah, so you live near the HQ for ...

BT?
Virgin?
UPS?
TFL?

inquiring minds want to know

 

[markjay]

Ah, so you live near the HQ for ...

BT?
Virgin?
UPS?
TFL?

inquiring minds want to know

I live near the Mercedes Benz dealer in T*************

 

[Beetnik]

No! Company is a separate legal entity. You owe the money to the company not to him. Bank being difficult suggests his company may be in difficulties. Paying him and not the company will be no defence if receivers are appointed and they'll come after you, quite legitimately. You could end up paying twice over.

 

[markjay]

No! Company is a separate legal entity. You owe the money to the company not to him. Bank being difficult suggests his company may be in difficulties. Paying him and not the company will be no defence if receivers are appointed and they'll come after you, quite legitimately. You could end up paying twice over.

I believe that if he has a letter from the company, asking him to make payment in settlement of the invoice into a specific bank account, and written by the owner/MD while he was in authority to do so (i.e. before receivers appointed), then he should be covered.

 

[Beetnik]

£50 and it's a risk I'd consider - anything substantial and my answer would be no. The OP is already on notice that the company may be in difficulties and could, therefore, be accused of assisting in the tort of conversion.

It's on a whole different level to a letter asking you to pay the company's factors, for instance.

If the supplier can legitimately route the funds through his personal bank account then he'll be able to accept a cheque payable to the company and endorse it in his own favour.

Whatever he may say the supplier's bank is unlikely to want rid of him as a customer for no good reason and it's more likely to be because they're bouncing his cheques than a disagreement over England's chances of winning the world cup.

 

[Mudster]

For information, (and a balanced point of view) having had our best in year ever and grown 30% last year my bank are actively trying to get rid of our business.

We have never bounced a cheque or missed any form of payment to anyone including the bank.....so why do they want rid?

We took them to the banking ombudsman for gross incompetance and our complaint was upheld, they cost us £100,000 over a 3 month period.

From the moment the award was made (we were awarded £200 in compensation despite demonstrating the £100,000 loss - the Omudsman states that the bank is not responisble for collateral loss due it's incompetance) our account facilities are being called in. Fortunately most of our debt is a term loan so can't be called, but our overdraft has been requested. We can afford it without crippling the business, many couldn't.

The bank in question is LloydsTSB, they are shocking and unable to operate the most simple day to day banking for businesses without continued and repeat errors.

We're moving to Barclays - I just expect the same nonsense to be honest.

Our problems mainly stem from international payments not being made at all, money being "lost" - incoming payments to our account being returned "account closed" despite it being very open, company charge and debit cards being cnaclled "account closed" despite it being very open, a loan application the took three months to process after agreement as LloydsTSB lost three sets of documents adn refused to admit it had ever had them despite us having written confirmation from them that they had recived them...it goes on and on and on.

 

[iscaboy]

I've been business banking with LloydsTSB since it was TSB, and can't fault them.