Checking accounts are a basic staple
in the business world. While all
business owners have them, they often overlook the different options and
types of accounts that are available for
their businesses.
Business checking accounts may seem
simple, but a closer look reveals that
they can help with earning income and
utilizing resources. Business owners are
always aware of their finances. But,
when they become too comfortable with
the accounts they’re using and don’t take
time to research new features or products, problems may occur, according to
Chris Stafford, business banker with
FirstMerit Bank.
Owners are busy, therefore, in many
instances, updating accounts falls under
the saying, “If it isn’t broke, don’t fix it.”
Thus, it’s important to work with business
banking professionals to find the account
that fits the needs of your company and
helps you increase profit. They can keep
you up to date on new products and
changes that may benefit your company.
Business bankers should add value to your
business, giving you time to focus on the
business itself, says Stafford.
Smart Business spoke with Stafford
about the benefits of business checking
accounts and how to stay up to date with
your accounts to benefit your business.
What should a business owner look for or be
aware of when selecting an account?
The specific features that are required
depend on the individual needs of the company. One should be aware of ‘special features’ or advertisements. The bottom line is
business accounts are rarely ‘free.’ If an
account is advertised as free, it is crucial
you ask about hidden fees. Business
accounts are not regulated the same as personal accounts and fees can be hidden in
numerous ways. ‘Free’ may cost you more
in the long run. With some accounts, minimum balances need to be maintained or
you may be limited to the number of transactions or items processed each month. As
a consumer, you must ask about and
understand the hidden fees a bank may
charge. There are many different products on the market, and it’s near impossible to
choose one on your own. This is a prime
time to sit down with advisers and business bankers to determine the needs of
your business and the right account for
those needs.
What is used to determine what account is
best for your company?
Cash flow. It is crucial that professionals
ask many questions about the cash flow of
the company. This is not limited to simply
income. For needs to be met properly,
advisers should know the amount of
money collected, the means used to collect
money, the path income takes after it is collected, the number of debits and how cash
is distributed. A business banker should
understand the overall cash flow process
and then determine which product best fits
the needs of the company.
How does a business checking account affect
a company’s bottom line?
Choosing the right account for your business and needs can lower overall expenses
and profit can be accrued. Some accounts
include such features as Sweep Accounts that move money out of operating
accounts and into overnight investments,
so it can collect interest income. On the flip
side, if a banker does not understand the
cash flow, he or she may recommend the
wrong account for your needs. There may
be extra fees for excessive debits or transactions. Without careful selection, a checking account could potentially cost you in
the long run.
How can you ensure that you are up to date
with your accounts?
To ensure you are up to date with the best
product for your company, at minimum, conduct annual reviews with your business
banker to receive information on new products and services. It is also OK to shop
around and see what the competition is offering to ensure you are receiving the best deal.
Finally, require that your entire team of professionals communicate and work together
for the benefit of the overall business.
When is the best time for an owner to open a
business account?
In order to properly plan for the current business and its future, a business
owner should start consulting a business
banker when the idea is still becoming a
reality. This way the bank can help the
owner predict what future funds he or
she may acquire and how to properly
transfer those funds for more profit. As
an owner, you need to know what is
available. Accounts should be up and
running before the doors to the business
open. If the business is new, you should
start with a basic business checking
account and work with your banker during the first few months the business is
open to review monthly activity and projections to determine what specific
account will benefit your overall business. Switching accounts is easy, and
you can often keep the same account
number and just switch the product
within the bank.
CHRIS STAFFORD is a business banker with FirstMerit Bank. Reach him at (216) 663-9620 or [email protected].
