As individuals, we are all acquainted with banks and the fees that they levy for various services.
However, when you open a business account, you might not be familiar with certain aspects of the terms and conditions, leading to the possibility of unwittingly incurring charges. This is because rules for business accounts and personal accounts are often different - another good reason, incidentally, to keep them decidedly separate from one another.
Avoiding Business Banking Charges
Therefore, you have to be particularly careful when operating as a business owner. After all, the smaller your enterprise, the more critical every dollar saved can be.
To help you achieve this, here are nine practical tips to help you reduce your business banking charges.
1. Pay Special Attention to Minimum Balance Requirements
Most banks levy monthly maintenance charges on your account, but many of them also have a policy of waiving these fees, too. However, it's usually dependent on one condition: you maintain a minimum balance amount in your business checking account each month.
Depending on the size and type of your bank, these costs can vary. For instance, some of the larger commercial banks can charge anywhere between $15 to $30 when you dip below the minimum, but if you are disciplined, then you can maintain the required minimum balance and make some serious savings on potential bank charges.
If you think you are going to be too busy with running your business to keep an eye on your account balance, you can even opt for alerts from your bank. If the account balance in your business account drops dangerously close to the cut-off point, then the bank will alert you through email or SMS.
2. Look for Special Offers on Business Accounts
Often, banks will run special promotional offers to attract new business owners; indeed, it is not unusual to see business accounts with zero charges for up to a year or more. If you're expecting a low volume of transactions (initially, at least), then this might be an excellent option to save on fees.
Do note that when banks offer these waivers, though, they also place restrictions on your transaction limits, as well as other limitations such as the number of cheque leaves you are entitled to. If you have a retail sales business, these curtailments may not be suitable for you.
3. Always Read the Fine Print
As a rule, do not sign up for any new account before going through its terms and conditions with a fine-tooth comb. All banks should provide you with a designated set of these conditions along with the application form.
You should also ask to obtain a copy before you open your account, as this will enable you to know what precisely you are and aren't entitled to should any issues arise further down the line.
4. Pay Close Attention to Monthly Limits
In most transaction-related services, banks impose monthly limits. If you exceed usage of a particular function – such as the number of ATM withdrawals – then, in most cases, your bank can charge you for each extra transaction.
If savings are high on your agenda, then it might be a good idea to keep a running tally of all such services, based on the number of times you have used them each month. This way, you can then work the system to your advantage and avoid extra charges.
5. Always Opt for Internet Banking
Banks prefer to interact online because it is more cost-effective than maintaining and paying for staff at a bricks-and-mortar branch. However, it should also be your preferred option, too. Online banking has numerous advantages that should make it the de-facto choice for your small business.
For instance, with internet banking, you can access your account details any time, and from anywhere. In some cases, you may even be able to negotiate a new agreement with your bank if you handle the majority of your account transactions online.
6. Reduce Business Cash Transactions
Cash transactions take more time to process when dealt with by staff at a bank branch, which is why most institutions now prefer online transactions. If you can reduce your company's reliance on cash sales, then this could have a significant impact on your banking.
The less cash you deposit in your bank's business, the better your chances of negotiating an account with low interest rates. This can be achieved by making changes to your payment options, or by asking your clients to pay you through alternative digital means.
7. Be Careful Around Cheques
Regardless of who is making the payment, you should pay close attention to all cheques that are related to your bank account. If one bounces, it can have a significantly negative effect: as well as not receiving the payment due, the bank will likely charge you, too.
This is why many businesses are now refusing payment by cheque – and why you should also be wary.
8. Look for Linking Potential for your Accounts
This advice is only valid if you have more than one account at the same bank (not including personal accounts). If you have a checking account, a savings account, and other long-term deposits at the bank, then you might be better off linking these accounts; the potential advantages of consolidation can range from fee waivers to better rates of interest.
9. Avoid Overdraft and Late Payment of Card Bills
This may sound like an obvious tip, but discipline in your finances is incredibly important when you are a business owner. When using a business credit card, for instance, make sure that you can pay the bill in full within one month; banks will charge you for late payment otherwise. If you keep a close eye on your accounts, you can also avoid going into an overdraft facility and escape extra card fees.
Essentially, there is no great secret to avoiding business bank charges; it is simply a case of managing your finances carefully, maintaining discipline in your withdrawals and deposits, and understanding what exactly the terms of your agreement with the bank are.
If possible, check your account online on a daily basis and act quickly if a problem arises; most major banks now have 24/7 support channels that can assist you in such cases. Most importantly, though, don't underestimate how quickly bank fees can accumulate and take out of your business budget – funds that could be better spent elsewhere. Stay on top of your finances, and you shouldn't have any problems avoiding business banking fees.
Meanwhile, if you need help in creating a corporate or personal bank account in any one of a wide range of desirable jurisdictions, then don't hesitate to speak to one of our experienced professionals for further advice!
What other tips would you recommend for staying clear of extra charges? Let us know in the comment section below.