How a Bank Account Will Help Your Small Business

Why You Need a Bank Account From Day-one Of Your Business

Many small business owners, especially in our environment, fail to operate a bank account to run their business, even long after they have been in active business. Research has identified a number of factors as being responsible:

  • Some do not understand the workings of banks and simply dread the idea of using banks. They choose to stay away.


  • Others believe they do not operate with sufficient capital to justify a banking relationship.


  • Some simply are concerned about bank charges which they fear will drain their limited resources.


  • There are those who just believe that banking is about borrowing from the bank and since, for a variety of reasons, they don't believe they can or will access bank lending, they find no justification for a banking relationship.


  • Another factor is fear of the paperwork involved in account-opening: multiple form completion, various documentations to produce, references, etc.


  • For some, it is the genuine concern over service delays and 'protocols' in banks. They believe that while they may find it easy to deposit money in the banks, withdrawing is a difficult, time-wasting task which is better avoided.


  • Their are some who genuinely dread losing their funds. They possibly lost money in the past to a distressed bank or know somebody who did.

If you fall into any of these categories and are running your business without a bank account, you need to think again. The truth is that you very much need a bank, even from day one of your business. The good news is that most of the grounds listed above can be faulted, especially in today's Nigerian banking environment, while the benefits of banking relationship may indeed be a big factor in the survival and growth of your business. Here are why the fears are unjustified.

Why you shouldn't avoid the Banks

  1. You don't need to be an expert in banking to relate with banks. Most bankers will protect and patiently guide you through the processes. Banks are generally streamlining their account-opening requirements to trim the form-completion process. If you're worried about the forms, find a bank that has chopped them down. Again, the staff can always guide and assist you.


  2. Most Banks do not demand huge sums of money to open an account for you, these days. A few banks in fact permit opening an account without an immediate deposit. So the size of your initial deposit should not stop you. Also, you can always withdraw you money, even more than once in a single day.


  3. Banks are generally in competition and tend to moderate their charges. Again, it's not every account that is subject to charges. You do not pay commission on turnover on a savings account. Ask questions from those who know better or shop around for a bank that best meets you requirement.


  4. Banks offer a lot of services beyond lending. If you do not borrow, you can enjoy the other services. Besides, you may need to borrow someday. Just find a bank that is small-business friendly and build a relationship. You don't know when you might need help from a bank.


  5. Delays at banks may still be a reality, especially when inter-branch transactions are involved. However, a lot has changed for the better in recent years and this trend is continuing. More products are coming out which could ease your headaches. An ATM card, for instance, easily saves you the trouble of joining the banking hall queue when small withdrawals are involved. Some banks offer mobile banking services you can also use. Make enquiries to know what each bank has to offer.


  6. The fear of exposure of you financial information may not be justified as banks are required to maintain confidentiality over your transactions. If they fail to honour this, you may have a good basis to sue for damages and get compensation. This should be enough assurance for you.


  7. As to loss of funds, while there is always a risk, our banks are stronger today. You can also pick and choose. Evaluate the banks properly before you settle for one. You can always find informed people you can ask questions. Also, when you choose a bank, remember to keep a watchful eye over it. Most people fail to do this and only wake to the realization that there is a problem with their bank only when it is too late to act.

Your gains from a banking relationship
Having a bank account will give leverage to your business, helping you perform better, achieve more and grow faster. How is this? An account relationship with a bank will do the following for you:

  1. If you are not very good with record keeping your bank account offers one reliable record of your important transactions, if you use it consistently. If you make your payments through your bank and bank all your sales proceeds, your bank statement will have a good record of your key transactions. This could be useful when internal sources fail you or require cross-checking.


  2. Use of a bank account can help you run a disciplined financial system for your business. Insist on having daily sales balanced and paid into the bank while operating expenses are run from a petty cash float. This way, accounting for your sales proceeds becomes more explicit and easier to track. Also your spending can be better monitored as you have a ready record of your outflows even from your cheque book.


  3. A bank relationship literally offers you free business school education. If you have interest and ask a lot of questions, your bank officers will readily turn you into a quasi financial expert. In marketing you for their products and services, banks offer you a lot of valuable information and knowledge. When you need guidance on your business, your banker is one of the dependable sources for free advice. Most bankers are knowledgeable and can guide you to perform better. You also can get lots of gain investment tips.


  4. Banks still lend to businesses, including the small ones, even if its difficult to obtain. However, they are interested in your business' track record. The import is that you don't wait until you require help before opening an account. Start early, build a track record with your bank so you can get help when you need it.


  5. There is a range of other beneficial services you can get from banks to leverage your business. Today, banks can locally transfer money to any part of the country for you. There are debit cards that save you the risk of a load of cash and yet permit you to use the money in you account at different locations. Your bank statement will be asked for when you seek a visa or engage in certain transactions. At other times, you will need a bank reference or guarantee.


  6. There is the opportunity to enhance your earnings when you run some accounts. Account types like the savings account and time deposits usually earn you interest.

Now you know. Starting off early with a bank account is in your best interest. It will help your business run better and earn you a lot of assistance from your banker. This is one important way of leveraging to grow your business.


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