I formed an LLC a few months ago for a consulting gig. A client now wants to pay me a sizable amount (mid five figures) for a project. Problem is my business bank account is only a few months old and has very little activity. The client's AP department is asking for bank verification or a letter of good standing, but my bank won't issue much beyond a standard account confirmation. Has anyone dealt with this? I'm worried the payment will get held up or flagged.
banking
My new LLC needs to receive a large payment before it has much banking history
What exactly is the client asking for? 'Bank verification' can mean a lot of things. If it's just confirming the account exists and is in the LLC's name, your bank should be able to provide a simple account verification letter. If they want proof of history, that's harder with a new account.
I ran into something similar when I started my LLC. The client's AP team was fine with a bank letter confirming the account and a copy of the LLC formation documents. They mostly wanted to make sure the name on the account matched the LLC. It took a few calls to get the right person at the bank, but it worked out.
Thanks. They mentioned 'bank verification' and also asked if I cuold provide a reference from the bank. I've only had the account since February, so theree's not much to reference. I'll ask the bank about a standard verification letter. Did either of you have to explain why the account was new?
I wouldn't overthink it. A mid five-figure payment isn't huge from a bank's perspective. As long as the client's AP is satisfied with the documentation, the money will clear. The bigger risk is the client delaying payment while they wait for paperwork they don't actually need. Ask them specifically what would satisfy their requirement.
Could you ask the client to pay via wire instead of ACH? Wires sometimes have different verification requirements. Not always, but worth asking.
Thats a good point about wires. But some AP departments are stricter with wires because of fraud. They might want a phone verification before sending. Either way, the OP should find out what the client's actual policy is rather than guessing.
To answer your question, yes, I had to explain the account was new. I just said the LLC was recently formed and the account was opened as soon as the formation documents were ready. Nobody pushed back. Most AP people understand that new businesses exist.
One more thing: make sure your bank knows the incoming payment is expected. A large deposit into a quiet account can trigger a review. A quick call to your banker saying 'hey, I'm expecting a payment from X for Y' can save you a headache.