It’s official: the business banking model of yesterday needs a refresh, for banks and business owners alike. Even before the coronavirus pandemic took hold, the onus was on financial institutions to embrace digital business banking. Ernst & Young wrote:
“Digital transformation in banking is not just about how to do the same things faster and more efficiently, but also about rethinking long-standing approaches, and developing new business models to deliver existing and new financial services.”
COVID-19 accelerated the need for a new and innovative approach to support business customers in navigating the new normal. Here’s what to look for when comparing online banking services.
Online Business Banking: Yes, Please
Many bank branches closed due to the coronavirus, and those that remained open or have reopened did so with reduced services to minimize contact. Walking into a branch office in 2020 and beyond may be a dramatically different experience compared to the open floor plan you once knew, highlighting the benefits of online business banking.
Previously, online and mobile banking were conveniences. Now, they are necessities (and legitimate safety measures). Between how busy you are as an entrepreneur and how unnecessary a visit to a brick-and-mortar bank has become, consider making the switch to an online-only bank that specializes in digital banking. This applies to opening a new account, too. In a survey conducted by the consulting firm BAI, approximately 70% of business owners said they would rather open a deposit account online.
Business Banking Fees: No, Thanks
Business banking traditionally comes with considerable fees. A 2020 study by WalletHub found that business checking accounts are 70% more expensive than branch-based personal checking accounts and 47% more expensive than online-only personal checking accounts. Fortunately, the tide is turning, and more cost-effective solutions are emerging.
While large financial institutions require monthly maintenance, transaction, cash handling and ATM fees as well as minimum balances, online banks can remove these costs for customers. As a business owner, you have enough expenses; your business bank account itself shouldn’t be one of them. “Simply put, online banks help you avoid unnecessary fees,” Nasdaq wrote.
Payments and Money Transfers: Give Me Options
Cash flow is the backbone of any business. In order to keep your cash flow running smoothly, you need a full lineup of payment and transfer tools readily available. Ideally, you will have access to:
- Mobile check deposits – Skip the trip to the bank or ATM, and deposit checks from your desk using your mobile device.
- ACH transfers – Secure, fast, electronic money transfers using the recipient’s account information.
- International wires – Secure, electronic, bank-to-bank transfers outside of the U.S., also sometimes referred to as remittance transfers.
- Domestic wires – Secure, electronic, bank-to-bank transfers within the U.S.
- Instant transfers – Transfer funds, fast, without worrying about business days or branch hours.
Remember to keep an eye out for fees associated with these services. Many banks charge up to $3 per money transfer, which can add up quickly. Incoming wires can cost as much as $15 or $30 per wire.
Your cash flow affects not only you, but also your employees, subcontractors, vendors and suppliers. Be efficient with your banking so that you can, in turn, be efficient with your accounts payable and keep everyone paid without delays or disruptions.
Business Bank Account: The New HQ
Just like in-branch banking is becoming dated, so is in-office accounting. The workplace of the future will rely on digital functions and remote access. Look to your business bank account to serve as your main hub for consolidating other business software and services, such as:
- QuickBooks – Online accounting software from Intuit.
- Xero – An online accounting software company from New Zealand.
- Wave – Financial services and software for small businesses.
- Kabbage – Small business funding options up to $250,000.
- Stripe – Online payment processing for e-commerce.
- Square – Secure credit card processing and point of sale solutions.
- PayPal – Make purchases and accept payments online.
Third-party integrations make your life easier and your accounting more streamlined. This is all the more important for entrepreneurs who are just starting out and planning to manage their business finances themselves. Go forward with the goal of making your business account as powerful as possible.
Azlo Spotlight: Built-in Invoicing
Reconciling your invoices and bank records can be a time-consuming task. One of the most unique features in the Azlo business banking suite is built-in invoicing. Instead of having to switch between your invoicing software and business checking for recordkeeping, you can send and monitor invoices directly from your bank account. Accept card payments through Stripe, Square or PayPal—or have your clients send you a check or bank transfer. With built-in invoicing, you’ll have a few fewer tabs open on your computer screen.
Avoid Common Business Banking Mistakes
Opening a business bank account is generally an easy-to-do, but there are a few things to keep in mind:
- Compare fees and balance requirements.
- Ask about transaction limits.
- Focus on digital banking capabilities and third-party integrations.
- If your business operates on cash transactions, an online-only bank may not be the right fit for you.
- Know the ATM network to minimize ATM fees.
- Have your business information on hand when opening your account.
Think Fast, Bank Faster
As an entrepreneur, you have passion, purpose and vision. You make decisions, complete tasks, implement ideas and empower others—all from one snap to the next. Choose a business bank account designed to keep up with the energy you bring each day.
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