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Bank account vital for small businesses

25 May, 2018 - 00:05 0 Views

eBusiness Weekly

Kudzai M. Mubaiwa
Serious business owners ensure they formalise — they move from basic trading to a proper registered company that would naturally go on to acquire a bank account in which to receive serious money.

There is a limit to which a business can operate without a bank account; as a matter of fact they are unlikely to secure any meaningful transactions, because it is widely known that tenders are awarded to establishments that meet minimum requirements of registration (as a company or private business corporation), tax clearance, company profile with traceable references and an operational bank account.

Selecting a bank to deal with requires some level of wisdom in present day Zimbabwe, those that have been around for a while are still smarting from decisions to transact with certain banks that went on to shut down in the past decade. Here are some factors to consider in selecting a bank.

Undoubtedly the safety and security of your money is key. Choose a bank that has pedigree, preferably one that has been around for a long while and has consistently served customers without the threat of being shut down. Business owners have to discard naivety and acquaint themselves with bank’s performance by reading their results and ensuring they are still sound and robust.

A decent bank will generate most income from core business — through interest, always watch out for huge non-interest income and question it. Do not ignore the sentiments of the general public and analysts reviews of bank performance; it may cost you your funds. It is necessary to check if your bank has registered with the Deposit Protection Corporation of Zimbabwe, to ensure recourse should the bank at some point fail.

The next key consideration is the cost of transactions. If a bank charges high fees, they must be matched with high quality of service.

Thankfully, bank charges are somewhat regulated and one can survey the available ones before committing. The intent of business is to make money, not lose more of it by committing it to a bank that has high transaction costs. In the long run, every dollar counts and will add up to something significant.

Ask for clarity on the anchor deposit amount or minimum balance (that which you cannot withdraw), the monthly charges and the per transaction charges.

On the flip side, be sure what they offer by way of interest when you deposit funds and the cost of money should you require a loan in the future.

Get a clear picture of their credit processes and turnaround time of processing; there should be a service level agreement of some sort in place already, such that you can manage expectations.

Organised banks will often have this information already printed out on fliers or displayed on their websites, along with their specific banking products. Choose the bank that best matches your requirements, or better still, that is flexible enough to tailor make them.

The use of technology is an important consideration in this age. In truth, people are not particularly keen on banks but they do want banking services.

Choose a bank that can offer you online access to your account information through mobile banking and online/internet banking.

One should be able to view simple things like their balance, statement without going to a physical branch, and be able to pay basic bills like utilities — water, power, rates, and telephone charges.

Moving money must be easy, both internally and externally. Essentially one would want a bank which they only interact with at the point of opening an account and thereafter as and when one goes in to sign loan paperwork only.

Branch footprint is important for certain types of businesses, especially those that have cash requirements in their value chain.

A farmer for example may have some recurring cash requirements for small payments to seasonal workers and would want to physically collect cash. Such a farmer would go with the bank that has nationwide presence, and has a branch near his place of work. The availability of funds also comes into play, there has to be access to hard cash when required in the cases where it is justified.

Thankfully, with the advent of mobile banking, many formerly cash requirements can be taken care of as people warm up to it and to using point of sale machines.

Find a bank that has easy connection with the mobile money platforms and allows you to easily move funds across your account and your mobile. In addition, for those whose businesses have an export element, or requires them to travel, a bank that has regional and international branches is a good idea.

Customer service is a crucial matter — choose a bank that is deliberate in customer service and care. The experiences of other colleagues will be instructive but often you can gauge this by how you are treated on enquiring, the efficiency of the account opening process, the after care and delivery of things like PINS and ATM Cards, the simple responses you get when you are in the bank.

One would hope for seamless service, rather than a bank branch that has silos within it, or silos between branches of the same bank. Personal bankers are so called for a reason, that they give you an experience that will have you advertising them to family and friends without coercion.

Granted, relationships are built over time but one must get the sense that bank is putting in maximum effort to retain you as a client. Banks that have strong corporate social responsibility tend to be liked by people as they seek to associate with success but also get the sense that part of their bank charges are applied towards good causes.

A small business does better with developing one banking relationship and maximising it and investing in a long-term relationship rather than having multiple accounts, an uneconomic decision anyway considering bank charges.

Once you feel that a bank does not serve you and you have tried to engage, in this environment there is no harm moving on to the next bank. Business banking must be of mutual benefit to you and the bank.

Feedback: Twitter @kumub, Email [email protected] <mailto:[email protected]>

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