When you’re running a small business you need to make every penny count, especially during an economic downturn. So the last thing you want to do is to pay over the odds for bank charges and fees on your business bank account.
Here are some of the simplest steps you can take to reduce the cost of your business banking.
If at all possible, make sure you do not eat into your overdraft facility (or even worse, eat into an unauthorised overdraft). Charges tend to be high – both in terms of one-off fees for unauthorised borrowing, but also in terms of standard overdraft interest rates.
If you find yourself regularly going into negative territory, it could be a good time to review your cashflow management.
As with most financial services products, online business accounts often offer very competitive rates of interest. Clearly, an online account will offer other time-saving benefits, such as the ability to set up standing orders online, or make instant payments instead of sending cheques.
Some of the major banks offer completely free banking for new businesses (up to 2 years in some cases). For more established companies, you can still open business accounts which are free on a day-to-day basis, with no transaction charges.
It is easy to be complacent if you’ve been with a bank for a number of years – but switching bank accounts is not a difficult process.
If your bank charges you by the number of transactions you generate, you could try to reduce the number of transactions by paying in a number of cheques and/or cash at the same time. Of course, you could also switch your business account to a bank which has minimal transaction charges.
If you have money sitting in your accounts make sure you are getting a fair rate of interest on your business current and deposit accounts. Although current account interest rates tend to be low, make sure you are receiving a competitive rate.
Shop around and find the best business deposit account for your business you can and transfer any spare funds, including money set aside for tax liabilities, into it.
Regularly review the most competitive savings account rates – you could be losing thousands a year in lost interest.