Small Business Banking

By: Tom Heath

The global ‘CreditCrunch’ is having an impact on many businesses and it is now as important asever that businesses manage funds as efficiently as possible.

Managing money hasalways been a major responsibility for businesses of all sizes, but it is ofeven greater importance for smaller companies with limited finances, as theyoften do not have the surplus funds needed to grow without borrowing.

The lack of credit inthe markets at the moment has meant that companies of all sizes need to take agood look at their arrangements in order to ensure that they are making the most of theirfunds.? Rather than seeing the creditcrunch as a barrier to profit and growth, it can be an opportunity forcompanies of all sizes to re-examine their business model in order to findsavings and to look at areas where they can reduce costs in order to findadditional money to fund their plans, without the need to borrow.

Perhaps the first placethat a company should look for savings is in their banking arrangements.? Many of the high street banks have a numberof fees that apply every time you pay in a cheque or deposit money in youraccount.? Overdrafts can also be asignificant cost due to interest charges.?By switching to a bank that offers a free to customers, it is possible to save adecent amount of money each month that can be used elsewhere.

Another area that allbusinesses should look at is the way in which their customers pay.? Many small businesses do not have sufficienttime to chase invoices, or give their clients 90 days in which to pay for goodsor services.? Where possible, try to getclients to pay more quickly – that way you will have the money in your accountearning interest as soon as possible.

When you have identifiedsavings within your business, and implemented the changes necessary to yourstructure to get the most out of every pound of revenue, you should think aboutwhat to do with the additional cash you have in your operation.

The best thing to dowith spare funds is to open a special that will pay you interest on your savings.? This way, rather than simply having the moneylying around doing nothing, you can earn interest on it that can be used forbills and other costs.? With an instantaccess savings account, you can put the money in as soon as you receive it, andthen simply transfer it into your current account as required – that way all ofyour spare cash can be working for you.

One of the main thingsthat you need to consider when choosing a business bank to suit the needs ofyour business is the ease with which you will be able to contact them andmanage the day to day running of your accounts.?While most banks now offer the ability to access money and accounts online,it is important to be sure that they also offer a dedicated business managerthat you can talk to when you need additional help or advice.

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