Banking can be as interesting as updating your resume, and as a small business owner you’ve got lots on your plate. But reviewing how your business and your bank or credit union are working together every now and again can save you money if you take the time. Here are five banking tips for small business owners:
1. Evaluate your business account manager
A bank or credit union is a product provider and the right banker is an ally that will deliver value-add service. Does he or she speak about their business products and services in a competent manner? When you talk about your business do they ask clarifying questions and offer suggestions to streamline banking activities? Are they interested in the future of your business and offer advice on how to improve your financial position to reach your goals? You should be able to consider your business account manager as a trusted adviser, so shop around for the right fit and don’t hesitate to move on if the relationship is not serving you.
2. Go for a package or pay-as-you-go?
Financial institutions often change their product and service offerings and you could save money by switching to a higher volume service package that is discounted, over a pay-as-you-go method. Contact your financial institution and stay on top of any product changes that may be a better fit for your changing needs as your business grows.
3. E-transfers or cheques?
It may be surprising but paying by cheque is cheaper than e-transfers by at least half. The next time you have to pay someone, ask yourself if the 200% convenience mark-up for the e-transfer is worth it.
4. Use lower cost online and digital self-service transactions
Things like mobile cheque deposits with your cell phone and online bill paying (including Canada Revenue Agency payroll remittances) save money and time. Say goodbye to travelling to the bank, looking for parking, and waiting in line.
5. Don’t pay yourself with your debit card
Bookeepers and accountants charge by the hour and your bank charges you by the transaction; which is considerably more than personal account transactions. On average you can expect to pay between .35 and .50 more per business transaction than those out of a personal account. Ten personal coffees out of your business account and you have spent enough in extra service charges that you could have invited a prospective client to coffee instead. Keep business and personal accounts separate. If you use your business account for personal spending on a regular basis you give everyone but you and your business your hard earned money. Decide on a pay level for yourself and make lump sum transfers to your personal account for daily use.
These tips are a good start to getting the most out of your financial institution. In a future post we will have some tips for keeping your business square with the CRA.