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When you open a business bank account for the first time you’ll soon come across one document in particular that you may not be familiar with.
This is the bank mandate (sometimes referred to as the account mandate) and it’s essential to understand how it works.
What is a business bank mandate?
A business bank mandate sets out the list of signatories that are authorised to access and manage the company bank account – such as directors, personal assistants or secretaries – and the instructions for doing so.
The signatories are those that are permitted to carry out certain banking functions on the company’s behalf, such as making payments, adding or removing other people from the mandate and taking out other banking products and services.
The main advantage of a bank mandate is that it makes clear to your banking provider exactly who in the business is permitted to access the relevant account. It also provides clarity within the organisation as to where responsibility lies for certain duties.
Banks may offer the ability to select access levels. This means that if you don’t want certain signatories to carry out all of the functions, you can tailor the permissions in a way that only allows them to do certain things (such as being able to view transactions but not set up new payments).
There are some downsides too, however. For example, in permitting individuals to carry out financial transactions for the business you are working very much on the basis of trust. If you open up permissions to staff who you don’t yet fully know or trust, you could be leaving the business vulnerable to fraudulent activity.
That’s one reason why companies may keep all their signatories in-house and choose not to include external consultants such as tax advisers or accountants.
What is a bank mandate form?
This is the document that the account holder(s) must complete to add or remove signatories on a business bank account. You may have to fill one in online or complete a paper form and send it off to your bank for approval.
How to set up and change a bank mandate
The bank mandate can be set up as part of the process of opening the account, or added and amended later on.
Any changes to the mandate have to be requested, then approved by your bank and any other signatories on the account.
Banks may ask you to call their business banking customer service line – or your relationship manager, if you have one. Alternatively, you may be asked to log onto your online banking and submit the request there. You’ll likely be sent some form of mandate change or variation form to complete, giving details of who is being added and/or removed.
You’ll need to make sure that all the Companies House information on the company and the signatories is up-to-date.
The change will usually take around seven to 10 business days to take effect, but it can be longer, especially if the bank has to come back to you with any queries.
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