Accounting Procedures for Handling Bank Mergers and Acquisitions: 10 Tips for a Smooth Transition

What Happens When Banks Merge?

You may have just heard from your preferred news feed that another bigger bank is acquiring your bank. Whether or not it is an amicable merger, you are glad when your local bank’s manager tells you personally that very next morning about the change. She says, “This merger will be great for you. It will offer new possibilities and modern banking and be a positive change for all of us.”

You like her and hope she will survive the merger, but you are also concerned about the actualities of the transition. Changing banks can be a hassle!

Your bank manager says, “We want this changeover to be minimally disruptive for you.” And so do we. With that in mind, we offer these tips for what to do before, during, and after the merger.

Things to do:

1. Download all available bank statements from your current bank. If possible, download PDF and Excel versions.
2. Have cash available just in case your debit card doesn’t work.
3. A/P: Create a report of vendors from your accounting software—review and sort the list by transaction type.
4. A/R: Create a report of customers from your accounting software—review and sort the list by transaction type.
5. Notify your payroll company of the change.
6. Decide to stay or start shopping for another bank.

Questions to ask your new banker:

1. How long will we be able to use our old checks, if at all?
2. When will we have to start using new account numbers and routing numbers with our vendors and customers?
3. Do you provide remote deposit service, and will our current equipment work with your software? If not, how soon will we receive the replacement remote deposit equipment?
4. Do you offer mobile banking?

Guidelines for Accounting Procedures

1. Chart of Accounts:

• First, set up the new bank accounts in your chart of accounts. Use the last four digits of the account number to keep everything organized.
• Next, set up your bank feeds for the new accounts. If you use QuickBooks, please note that it will automatically create an opening equity balance. Unless this matches the carry-over balance exactly, delete this entry, and do a transfer within QuickBooks of the exact amount that was moved to your newly set up account in
• If you don’t want to stay with the merger bank and prefer to find a new one, take the above steps to accommodate the merger bank accounts and create additional accounts and bank feeds for your new bank of choice

2. Bank Reconciliations

• You will receive two sets of bank statements: Closing statements from your old bank and new statements from the merger bank. Both old and new accounts will need to be reconciled.
• Your beginning balance in the new account should be zero. If not, remove the beginning equity balance transaction that QuickBooks automatically created.
• Some transactions may need to be moved from your old account to the new one. Carefully review these in the bank feed. There could be duplications that can cause issues. If you notice duplications, exclude them.
• If you have any transactions from previous periods in your former account, follow up on them if any checks were lost or to check for duplications for potential voids.
• After you reconcile your old bank account and the remaining balance is zero, you can choose to inactivate the accounts from your chart of accounts.

3. Accounts Payable

• Sort or filter the vendor list we created in the Things to Do section by transaction type using your vendor report.
• Review your transaction types for debits, e-checks, and ACH.
• Notify autopay vendors of bank changes or manually update the vendor payment portal.
• Remember to update your banking information if you are using third-party A/P services.
• Update banking with your vendors as required by the new bank to avoid any possible late fees.

4. Accounts Receivable

• Sort or filter the customer list we created in the Things to Do section by transaction type using your customer report.
• Review your transaction types for debits, e-checks, and ACH.
• Notify customers set up with recurring payments, direct deposits, or ACH payment methods of the new bank account information.
• Remember to update your banking information if you are using third-party A/R services, including merchant services.
• Update banking with your customers as required by the new bank to avoid payment delays.

Some Thoughts for After the Merger: What if You Don’t Like the New Bank?

Navigating change can sometimes be challenging. If you didn’t have time to vet the new bank and are uncertain whether to stay with them or search for one that suits your business needs better, you will at least know what’s involved.

Worst Case: You’ll have to change everything again. But you’re prepared.

Best Case: You’ll have the services you need and the customer relationship that makes your days go better. You may even get back your favorite local bank manager!

Ten Quick Tips for an Easier Bank Transition

1. Download bank statements from the old bank.
2. Set up new accounts in your chart of accounts.
3. Set up new bank feeds.
4. Reconcile both old and new accounts at month end.
5. Review remaining items in the old account and act on open items.
6. Review vendor lists for notification of the bank change.
7. Review customer lists for notification of the bank change.
8. Notify or manually update your 3^rd-party merchant services.
9. Notify your 3^rd-party payroll company of the change.
10. Order checks for the new accounts.

Bonus Tip #11: Contact your CPA firm for guidance if you’re not sure. For instance, LSL CPAs can help.