Anyone who is serious about growing their business will talk to you about the importance of having a sound relationship with a bank that serves the needs of its business customers. That means working with a bank that knows business banking. Business banking describes a wide range of banking services designed exclusively for the bank’s business customers.
Business Banking is Specifically Designed to Meet the Needs of Its Business Customers
Business banking includes any aspect of a company’s financial dealings with a financial services provider. Typical financial dealings in business banking include business loans and other forms of credit including real estate loans, commercial loans and credit card services. It also includes holding savings and checking accounts specifically designed for companies. Other miscellaneous banking services offered by business banks include merchant banking facilities, rent payments, foreign exchange transactions and securities trading.
Retail vs Investment Banks
A bank that does business primarily with individual customers and consumers is known as a retail bank. A bank that does business exclusively with capital markets is an investment bank. Business banking occurs when a bank, or division of a bank, only deals with businesses.
Business Banking Services Offered
Most business banking customers are small and locally-owned businesses. The advantage of being a business banker is the banking services are designed to keep your funds safe while giving you a clear, real-time picture of your company’s financial health.
Among the services typically offered to business customers include the following:
One of the most important services offered to business customers is bank financing. For many businesses, financing is a key source of capital. It provides funds to support business expansion strategies, equipment purchases, or to cover certain operating expenses. In business banking, the bank will work with business executives to develop financing programs customized to help ensure the business succeeds. The bank has the flexibility to design and offer credit on terms tailored to a company’s needs, whether short- or long-term loans, lines of credit, or other forms of financing.
Cash and Payment Management
Business banking cash management services are a fantastic way for businesses to realize better efficiency. Cash management services help business customers manage their receivables, payables, cash on hand, or liquidity. Professional business banks can establish customized processes for business customers to streamline their cash management operations. These valuable services can help the business lower its operating costs, leaving it with more cash on hand.
Automatic Money Transfers
Like most modern banking services, business banking utilizes electronic payment processing systems to accelerate money transfers. Business banks also allow for the automatic transfer of money out of a company’s idle checking accounts and into the company’s interest-bearing savings accounts. In this way, cash management is enhanced because the cash surplus is always working for the business banking customer, while the business checking account has enough of a balance to cover the day’s payments.
How Do You Open a Business Account with a Bank?
Opening a business account is the first step to establishing your business banking relationship. To open a business account, you will need:
Employer Identification Number
An EIN is a unique number issued to businesses by the IRS for tax purposes. If you have not already applied to the IRS for an EIN number, you will need to do so before you establish a business account. It costs nothing to apply.
Business Formation Documents
If your business entity is a partnership, LLC, or corporation, you or your attorney created documents to form it.
In some cases, you need a government-issued business license.
What Services Are Available to You
What business banking services does the bank offer and what does your business need? Financing, cash flow and payment management, quick access to cash, lines of credit? Each may or may not be what your business needs to grow. Be sure to discuss these features in detail with a business banker.
A business development officer can help you determine what type of account(s) you need. You should consider the following factors when opening an account and deciding which bank is right for your business:
Mobile Banking Services
Make sure you will be able to access your accounts online and have immediate access to funds.
Banks often charge fees for these services. Some fees are disclosed up front, but some fees may be less apparent at the time you open an account. It is important that you ask the bank for a complete explanation of each fee it may charge.
Cash Deposit, Withdrawal, and Transaction Limits
Some business checking accounts limit the amount of cash an owner can deposit, withdraw, or transact within a defined period. If you exceed the limits in a month or a billing cycle, you could have to pay additional fees. Before you open an account, make sure you know about any limits and potential additional fees for exceeding them.
Speak to the Business Banking Experts at FVCbank for more information
Whether you are a new business customer or one that is looking for the best business banking services you can find, be sure to talk to FVCbank. Their proven, cost-effective financial services can help give your business the lift it needs to improve efficiency and profitability.