Business Bank Account Basics You Need For Work

Opening a business bank account for your business helps you meet your cash flow management needs. Business banking is specifically designed to meet the needs of business by offering access to specially designed products and services.

There are some basics you need to understand about business banking in order to make the relationship work for you. From business checking to establishing an open credit line, managing cash flow and access to loans, understanding these basics will help you create a more powerful business banking relationship. Your business and business bank should be partners in the goal of making your business more efficient, productive and prosperous.

Business Checking

The most basic service that a business bank provides is a business checking account. The business banking account helps you establish a depository for all funds and revenues that come in to the small business.

Your business checking account established at a business bank is a commercial account, as oppose to a personal or retail account that you may maintain. The commercial account is treated differently to take into account the way money is paid to a business.

The checking account typically makes deductions in arrears or on a delay basis. This differs from your personal checking where deductions are made automatically. With arrears checking, the business bank recognizes that a business’s billing cycle and account receivable’s cycle are not always in sync with each other. Offering this type of service allows the business to maintain its cash flow and not be subject to overdraft fees, which can hurt its credit rating.

Business Credit Line

A business bank offers lines of credit to businesses. Business lines of credit provide businesses with a way to meet their short-term capital needs without having to sacrifice other areas of business development.

Such needs as payroll and other commitments that require a large capital amount can cause some business owners to go out of business without a dedicated source of funding to tap in. Credit lines fund the gap between the time an obligation is due (such as bi-weekly payroll) and when capital is received. When recent economic time caused some banks to restrict access to business lines of credit, the effect was devastating on companies and workers who relied on that access.

Cash Flow Management Tools

A new tool being offered to businesses are cash flow management tools. This combines the businesses account payables and receivables as well as statement of cash flow into a streamline process to show the business how their money is being spent and earned and how best to manage the business’s money. Cash flow management arms the business with the necessary tool to negotiate better payment schedules as well as stay on top of their financial situation.

Business Lending

Business banking provides loan services at rates that are more favorable than what can be obtained on a personal basis. This means that a business can use a business bank to acquire capital at a lower cost to purchase equipment, expand office or plant space and take on other projects that would not otherwise be feasible.

These are a few of the basics that you need to understand as a business banking customer. Working with a business bank gives you access to a broad range of services and products to help you become a more successful business owner.