Bank expenses can be a costly expense if not periodically reviewed. With shrinking interest rate margins banks are looking at generating additional income from business account analysis fees. If your organization has any volume of debit and credit activity and uses a cash management system chances are that you are on analysis.
The process consists of an Earnings rate credit which is the rate the bank will pay your organization for the collected balances and the fees for service which are then deducted to arrive at a plus or minus figure. The minus figure is then deducted from the account as the service charge.
Each bank sets their own earnings rate credit percentage and has their own schedule of fees and charges. These vary widely from bank to bank. For example earnings rate interest can run from .10% to .75%. On the fee side some banks charge an “administration fee” which can be substantial. Some banks will allow the organization to offset the negative months with the positive ones and settle up either within a six month period or at least quarterly. Some just charge for the negative one month and give no credit for the months the business was in positive territory.
Of course a good banking relationship is also based on other considerations such as donations, sponsorships, credit facilities and good service. However if it looks like your non profit is being short changed it is worth asking why. Banks are very competitive and will carefully sharpen their pencils to obtain a new customer or to keep a good one.