I’d like to share the current experience I’m having with Monzo for the benefit of other small businesses…
If you’re a sole trader and planning to one day incorporate your business to a limited company then you need to beware of opening a business bank account with Monzo.
For me, that day is today.
Now the problems may be specific to my own business but it seems a bit unlikely.
First of all it’s important to know that a limited business is a separate legal entity in its own rite, so no matter where you bank, you’ll need to have a new and separate bank account for your incorporated business - that happens no matter which bank you use - so you will have to go through the pain of getting all your customers to pay their standing orders into the new bank account, and manually change over all incoming and outgoing direct debits and any saved card numbers to work with the new account
That can be a bit of a painful experience with any bank - you don’t have the luxury of an account switch option like you do moving from one personal bank to another - because you as a sole trader and your limited companies are two separate entities. So keep that in mind.
Now, knowing that’s a difficult and time consuming process in itself no matter who you bank with, you’d like to think that Monzo would be looking at ways to make it easier, or at least be as good as the other banks.
Oh no, apparently not - for some reason, Monzo have applied an arbitrary number of days between you opening the new ltd company account and them closing the sole trader one for you.
Initially - that limit was 7 (yes just SEVEN) days - so basically, unless you can persuade all your customers to change their payments and sort out your own direct debits and saved card details to swap over in less than a week - you’re going to get bounced expense and income all over the place - and Monzo’s not going to be able to help you sort that out.
They have, after much cajoling, agreed to extend that limit to 30 days for me, but realistically, if you’re a growing business, sending out monthly recurring invoices throughout the month and being paid by standing order, it’s going to be at least 2 months before you know if something is missing or has bounced coming in, or a payment has been missed going out - damaging your reputation and credibility with that supplier.
It does seem as though this is something that Monzo has NEVER had to deal with before, as they’re looking into trying to help, but don’t seem to have a solution yet.
So, in short, if you’re opening an account as a sole trader and plan to one day grow your business and incorporate, you may want to think twice about starting with Monzo as a sole trader so you, your customers and suppliers don’t have a world of pain just because Monzo have a 7 day limit on running two business accounts in parallel !!
To be fair, Monzo are still looking into this, but having pre-empted it with them over a month ago and been told it wouldn’t be a problem, I’m now finding it is indeed the very problem with discussed beforehand and tried to prevent - disappointing and not up to Monzo’s usual exceptional high standards.