To run a successful small business, owners need to balance the books and plan for their future. However, this isn’t always easy to balance alongside working to be profitable. Luckily, your bank may offer more tools and resources than you realize to help you achieve a solid financial foundation.
In today’s changing markets, nearly every industry faces challenges and opportunities to achieve these goals. Here are a few small business banking tips that may provide you with the extra edge you need to achieve the best outcome.
Ensure You’re Not Overpaying On Fees
Business banking doesn’t have to be expensive. However, it can be, especially if you haven’t put much thought into the financial institution you’re working with for your checking and savings accounts.
As a starting point, take a closer look at your account fees. While fees range between companies, some organizations charge a significantly higher fee for simple transactions such as writing checks or per-transaction costs.
Some fees are based on the number of transactions you make every month, while others are based on the volume of cash, coin, and checks you write as a part of your business. If you own a higher volume small business with numerous transactions daily, weekly, or even monthly, these fees add up quickly and can tank your cash flow.
So, what should you do? To make sure you aren’t overpaying on fees:
- Know what exactly you’re paying and check your existing fees.
- Look for financial institutions that don’t charge such high fees.
- Use cash management services that can help to minimize costs by maximizing efficiency and lowering fees.
Know When To Borrow
Many small business owners have to borrow money from time to time. Borrowing can help build inventory during an off-season, cover costs in the slow season, help with expansions, and aid in consolidating debt. While borrowing may be necessary from time to time, learning when and how to properly take out a loan is a bit complex. Here are a few tips to help you borrow successfully:
- Lines of credit for businesses tend to have a lower interest rate than using a credit card. Look to a bank to help you set up a line of credit that’s routinely available at a lower cost.
- Consider a longer-term loan for larger borrowing needs, such as business expansion or to spur growth. These loans may help you to meet bigger goals with affordable interest rates.
- For short-term needs, it’s a good idea to look for a company that offers fast solutions to cash flow shortages. Short-term loans may have a lower threshold for borrowing, with slightly higher fees but provide funds faster.
- There is a use for credit cards as well! They allow you to easily manage expenses in one location. Pay them off monthly to save.
Be sure your financial institution offers business loans that are right for your specific borrowing needs.
Reach Out For Help When You Need It
View your bank as a partner in building your business. There will be times when you need financial backing, support, or guidance. If you do not feel comfortable turning to your financial provider, it may be time to look for another. You should feel as though you can easily – and comfortably – discuss loans, banking solutions, and other opportunities your financial institution can offer with your provider.
For example, do you have efficient deposits? Is your bank able to work directly with your accounting team to set up transaction management? These are all things you should be able to openly talk through and determine with your provider.
To achieve the best outcome, reach out to your financial partner. First, talk about what your specific needs are. Then, make the connection to build good, strong relationships with the banks that want to be there to support your local business.
Don’t Over Do It With Your Merchant Account
A merchant account is a valuable investment tool. It allows your customers to make payments to you using debit and credit cards – something most consumers today prefer because it is easy to do. It also helps with record-keeping and overall cash management for businesses. The problem is that it can be hard to know which type of merchant account service is right for your business.
One that’s too large or has too many unnecessary features can add up in costs. If you choose a volume-based plan (because you have fewer transactions) that may save you money in the long run. You may need to consider a high-volume plan if you are processing a higher number of transactions each day.
Have Personal Accounts Set Aside From Business Accounts
If you have not done so yet, ensure your personal and business accounts are separate from each other. That means you should not use your business credit cards, savings accounts, or checking accounts for any type of personal use – even if you would typically use the money within your accounts at a later date.
Specific business accounts help to reduce risk to your personal assets. Additionally, come time to pay taxes, you need a simple way to show how much revenue your business had in the previous year. Having a separate business account also enables you to efficiently manage expenses. It is easy to see who you are paying.
Establish A Savings Account For Your Business
While you may have a savings account for your personal use now, it also helps to set up one for your small business. Savings accounts for businesses allow you to work to build up funds for special projects. They may also help you reduce overall costs in the event of an emergency expense. In this case, you won’t have to turn to your credit cards to help with expenses. Many savings accounts earn interest, too, giving you some returns.
As you work to build your small business, remember that your financial institution is there to offer support. They provide the resources you need to balance your finances while also providing opportunities to grow your business. Seek out a trusted bank that can help you to make wise decisions throughout the lifetime of your small business.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.