Every day, businesses have to process multiple financial transactions such as accepting payments from customers, paying salaries, bills, and vendors, among others. To handle these transactions effectively, businesses need a separate bank account that gives them the flexibility to make multiple transactions per day, along with other useful banking services. This is where a Current Account comes in as a solution for managing the everyday financial needs of a business.
However, with various banks offering Current Accounts with different criteria, requirements, and charges, it becomes more important to choose one that offers the right features for your business. You need to consider the fees and charges, transaction limits, overdraft facilities, online banking capabilities, and multiple other factors.
To make this decision easier, here are four critical criteria to consider before opening a Current Account.
- Assess your business needs
Consider the size of your business, transaction volume, payment methods, and the cash flow you need. This analysis will enable you to identify the types of Current Accounts that offer all the necessary functionalities and features you need to help grow and sustain your business.
For example, if you keep idle funds in your account, Current Accounts with an ActivMoney facility can help you earn interest on that excess money. Similarly, if your business deals with international transactions, some Current Accounts are designed solely for that purpose, making it easier to handle cross-border payments.
- Understand the minimum balance requirement
Most Current Accounts impose a minimum balance and falling below it incurs penalties or fees. Therefore, understanding the minimum balance requirement is vital to avoid unnecessary charges.
Look for an account that aligns with your cash flow requirements. For example, if you run a seasonal business, it’s better to opt for a company Current Account with a lower minimum balance so that you can avoid additional charges during the offseason.
- Online banking services
Ensure that the Current Account you choose provides 24/7 online access and essential features such as e-payments, account balance enquiries, and easy fund transfers. This will save you time and effort, giving you the flexibility to focus on your core business operations.
It’s also worth checking if they provide a dedicated mobile banking app to meet all your banking needs in one place. Through these apps, you can complete the procedure for opening a Current Account online and enjoy added benefits such as the ability to scan and pay, transfer money, and even apply for loans.
- Overdraft facility and its limit
Choosing a Current Account with an overdraft facility can be a wise decision, especially if you want to be prepared for unexpected financial hardships. This facility allows you to withdraw even if your account balance is zero and the limit is determined by various factors, such as account balance, financial stability, age of account with bank, relationship with bank, creditworthiness, and debts or defaults (if any).
Look for a business Current Account that offers a substantial overdraft limit with competitive interest rates. Moreover, understand the terms and conditions, such as repayment terms and default payment fees to ensure that the facility is manageable and won’t cause financial strain.
Ending notes
Once you have analysed your options and selected the right Current Account, you can proceed with the application process. The procedure is the same as any other account and can be done online through the bank website or mobile banking apps.
Just fill out the Current Account opening form, provide personal details, and submit all necessary documents. Once the verification process is complete, you will receive your account details, including chequebook, debit card, internet banking credentials, etc.
Now you can use your new Current Account to manage your business operations, cash flow and finances.