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 Christopher.Stafford@firstmerit.com.