Pragmatic banking tips for small business owners

Small business owners face many challenges, like resource limitations, financial struggles, hardcore competition, and unpredictable market trends. This makes them fight on many fronts. In such a situation, stable finances can help win every battle. After all, a commercial entity is all about money matters. Banking services play an important role in managing finances. One needs an insight into managing things better.  

By using some significant banking tips, it is easier to ensure the financial stability of a small business.

Banking tips + wisdom = business growth

Yes, this is completely true. If you have your own small-scale business, you must also be struggling in many aspects. Banking transactions or banking services are quite important in your entrepreneurial journey.

Let us discuss about some such tips which take you and your business to great heights.

Free business checking may be a disguise for monthly fees and costs

Some banks claim that free checking is available in their bank. However, it may not be true. For the purpose of advertisement, many banks sometimes hide and mention some features which they do not provide in reality. Apart from this, they also apply a condition of minimum monthly balance on their customers.

You may not be able to meet the minimum balance requirement. For small businesses, the money in the bank account keeps fluctuating. In such a situation, it is important that you cross-check all these things properly before opening an account.

By reading the reviews of other customers, you can be well aware of the reality. Some banks also charge transaction fees. In such a situation, if many transactions happen in your business every month, you have to bear a heavy cost.

Consider business loan options other than those offered by banks

It is true that small business owners first turn to their banks to get a business loan. After all, every bank provides loans to its customers at affordable rates. But you also have to keep in mind that banks are part of mainstream lending. They have stringent rules regarding loan eligibility.

In such a situation, if there is any financial weakness in your business, you may get rejection or a loan at a higher rate. Especially if you have a bad credit score, the chances of loan rejection are high. Alternative funding sources should also be considered. For example, through direct lenders, you can easily get long-term bad credit loans in the UK as per your repayment capacity.

Here, you get an instant approval decision. Through customized deals, you get the loan amount that you can afford. The best thing is that the chances of loan rejection are low in direct lending. If your business credit rating improves before applying for the loans, direct lenders approve funds easily.

Read the fine prints

Before signing any bank document, do not forget to read the conditions in the fine print at the bottom. This is the place where minimum fees, features and other options are mentioned. If you want to avoid surprises and want the best services from your business account, pay attention to these fine prints.  

This lets you know what charges your bank can take from you, for example, transaction fees, late fees, flat fees, penalties, etc. Along with this, you also get to know the reasons for each type of charge and fee. Many times it happens that the customer does not pay attention to the conditions written in small fonts. As a result, he overlooks important points by signing the agreement.

It is very important to clearly understand the terms and conditions and bank rules. Financial advisors advise you to read all the documents carefully. Signing on a document without care can put you in a big problem in the future. Yes, it feels lazy to read things carefully. But after all, it is going to affect all your business transactions. Irrespective of the size of the business, few banking habits apply to all business sectors.

One bank account or multiple accounts

Whether to have one bank account or multiple business bank accounts depends on the nature of your business. Keeping in mind your future goals, business operations, growth plans, etc., decides whether you need one business account or multiple.

For example, startups usually need one business account because, initially, they do not have multiple transactions. Whereas for established businesses it may be necessary to have separate accounts to meet their unique business needs.

A primary checking account helps in handling the transactions of your general business operations. Apart from this, you can keep a separate bank account for payroll. If you deal business to business, then a considerable portion of your revenue comes through invoices. In such a situation, it is better to have a separate receivables account.

Keep your business and personal accounts separate

If you mix your business bank account and personal account, it is unfair to your personal as well as business finances. Never mix personal expenses and business expenses. Mostly, it is seen that small business owners have a professional attitude in this matter.

Sometimes, they take out money from their household expenses and spend it on business. Vice versa, they use the revenue from their business for personal expenses. Do you do the same? It’s wrong; you are putting your business in short-term and long-term financial threats. It is very important that your business account is completely separate from your personal account.

After all, every bank provides different types of features for a business account. They are completely different from a personal bank account. Gradually, when your business grows, mixing finances can put you in financial confusion. It also signifies an unethical business action. During an early audit or tax filing, combining both accounts can put you in a big legal complication.

Ensure security with ACH payments

There is no need to tell how much a business owner is concerned about the security of business transactions. It would be better that whenever you set up your bank account, activate the Automated Clearing House payment feature. This feature is the strongest shield for all the transactions happening through your bank account.

This feature is a secure and convenient way to transfer money. Nowadays, most businesses ensure the security of their transactions by using it. Whether you run a business-to-customer business or business-to-business model, in both situations, it is vital to work on security. In such a situation, safety becomes a priority.

Apart from this, PCI DSS is also required to be connected to your bank account. PCI-DSS stands for Payment Card Industry Data Security Standard. This technology secures all your transactions through OTP. It provides three layers of security on money transfer. No matter how much your business grows. If you have not secured your bank account, even a small technical glitch can cause you a huge loss.

Conclusion

The points above give the following conclusions -

- When buying a business bank account, it is important to see what facilities your bank provides for small businesses, whether it is loan options like unsecured business loans in the UK for bad credit or a free checking facility.

- Before knowing the features of your bank account, try to know about the bank. A financial product reflects the policies of its financial organization in its features

- Choose a bank that is popular for providing better services to small businesses. If other business owners are happy with its services, it can be a good option for you, too.