As is evident from its name, business banking refers to a company’s financial dealings with a bank that typically has a significant business customer base. These include everything from business loans, savings accounts, credit, to checking accounts, among other provisions.
The consistently increasing demand for business banking has only made the sector more competitive and innovative. Banks recognise this trend. According to a survey by Aite, 82% of commercial bankers point to improving the user experience for commercial banking clients as a top priority.
Understanding business banking
Business banking is also referred to as commercial or corporate banking. Banks provide a range of financial services to all kinds of businesses – small, medium, or large corporations. Some of these services are:
- Bank financing – Provision of short-term and long-term loans for business expansion and to cover significant business expenses.
- Cash management – Services like automatic transferral of cash from idle checking accounts to interest-bearing accounts for a surplus of cash for its customers.
- Fraud protection – Prevention of fraud on checking accounts because arising out of multiple people having access.
- Payroll services – Payroll management software/services for small businesses.
If you’re just starting out as a business or would like to manage your business finances better, here are some tips to bear in mind for maintaining proper business banking etiquette and improving your experience:
Business banking etiquette
#1 Engage in proper financial planning
This first step is crucial for all business owners to follow. In cases of minor short-term losses, you need to have funds to fall back on.
Setting the right financial budgets, not overspending, or underspending are crucial elements of a good financial plan. Underestimating your competitors can also lead to poor to no profits, which factors into proper financial planning.
#2 Explore your borrowing options
With many business banks emerging, it’s important to research the options available to you. Choosing the right bank can make all the difference. The interest rates shouldn’t be the only question to have in mind. Since businesses are all about profits and losses, you need to consider the repayment policies carefully in case of credit. Consider the following factors:
- Repayment options
- Flexibility of the repayment period
- Penalties for defaulting on repayment
- Guarantees (collateral for instance) that you need to provide
#3 Demand Superior Services
It’s a competitive banking world out there. And since it’s a free market, business customers can, and should demand superior services. From quick payments to add-ons like insurance, it’s possible to find business banks that serve your precise needs.
For example, according to a report by Raddon, 72% of small business owners already use or are likely to use expedited payments if the service were offered by their financial institution.
#4 Go Mobile
Banking is increasingly digital, almost entirely, in many cases. Neobanks are no longer for early adopters. Instead, neobanks are thriving. The term refers to independent and digital-only entities. Neo banks do not have a physical presence but do deliver on all banking services. Consider Salt.
#5 Track all your records and read all documents carefully
Lenders are finicky about their customers having all the necessary documentation intact, so make sure you have the proper paperwork/digital paperwork (whichever is applicable). Hire someone to take care of all the records if need be. Don’t just peruse the documents you’re going to sign at a glance, but delve deeper and read every clause with undivided attention. Misunderstandings about the points mentioned in the documents can cost you later.
#6 Don’t forget to pay your taxes
This goes without saying. Having a regular interval to pay your taxes (like the 1st of every month depending on the tax interval in your country/industry) can help you manage finances better. Not paying your taxes because you missed or for any other reason, can be extremely harsh on your finances. Know your tax rates, penalties in your country, tax filing deadlines, among other things, to make sure you pay your taxes on time.
#7 Develop long term relationships with a trusted bank
Explore all the options, choose the right bank for you, and build a long-term relationship with the bank you pick. Switching banks in between is not advisable and can be disadvantageous for you in the sense that you lose consistency in financial management.
#8 Don’t mix personal and business money
Don’t mingle your personal money and your business money. Doing so can affect not only your business but also your personal finance management. You might miss out on some tax deductions, or spend a little more or less if your personal money is involved. It’s always advised to have separate accounts or even respective banks if your business is enormous. This is where business banks come to the rescue.
Above all though, being planned and meticulous can go a long way in helping you make the right banking decisions for your company. At Salt, with its wide range of business banking services, even small enterprises just starting out are in good hands. Salt being a neobank, it’s an extremely neat experience for commercial banking customers. There’s very little room for error.