Avoiding the Bank Account Freeze Out

Posted by William J. Piercy on

An all too common by-product of business partnership disputes is the bank account freeze out.  One partner, who historically performed the finance and accounting responsibilities of the business, changes the passwords for online banking access and refuses to share that information, or the checkbook, with his business partner.  The frosted partner contacts the bank, only to discover that the relationship manager assigned to the business’s accounts has never heard of him and the signature cards on file do not bear the iced partner’s name. 

Banks generally require that all authorized signers be physically present at the same bank branch when a business account is opened.  Some even require that everyone with an ownership interest in the business be present for changes to be made to the account.  An owner who was not present when the account was opened, or who was not later added as an authorized signer, may encounter difficulty in convincing the bank to allow him access to the accounts of his own business. 

There are steps one can take to reduce the likelihood of becoming the frosted partner. Being listed as an authorized signer on the account is a great start. Ensuring this status while relations are warm means not having to worry as much if things later turn frosty.  Retaining copies of documentation confirming account access is helpful.  Each partner would also do well to cultivate a relationship with the appropriate bank representatives to ensure that the bank knows every partner in the business.

Another way to protect one’s access to business bank accounts is to monitor them online. Sign in regularly and look for irregular transactions.  Set up text notifications for transactions over a certain amount or for changes to account status. Most online banking platforms provide two or three different levels of access. Account signatories will have full access to the account: the ability to view transactions, make transfers, amend documents, register for text notifications, set up bulk payments, and apply for business loans. Non-account signatories can generally view the account, but not transfer money or make account changes.  An intermediate level of access may allow the user to make transfers between business accounts or issue checks to employees, but not to transfer outside of the bank or apply for loans. Understanding these distinctions and regularly testing login access to the different features of online banking can help spot issues before they get out of hand. 

Even the best proactive measures are not foolproof.  It may become necessary to file a lawsuit to compel access to the business’s bank accounts.  A good lawyer can analyze the cold hard facts and guide an exiled partner to the appropriate remedy. Being proactive at the first sign of trouble (or even before then) may be the best protection against being left out in the cold. 


Ashley Bowcott, a summer law clerk at Berman Fink Van Horn, contributed to this article.