Banking to suit your business needs

All businesses need to use banking services. Spend some time considering what you will need, as the services have different fees attached. There are two main types of banking:

• transaction banking
• merchant facilities.

Transactional banking products

When deciding what type of transaction banking products your business will need, it is important to look at the type of business you are offering to your customers, what your suppliers need and how you want to manage your cash flow. The most common transaction banking products are:

• internet banking
• credits to accounts - electronically, manually or by direct credit
• debits to accounts - electronically or by cheque
• Bpay via credit or debit card
• overdraft and other limit facilities
• cheque production facility
• lockbox service - secure processing of a mailed cheque, money order or credit card payment
• payroll processing arrangements.

All businesses will need an account which can be accessed by cheque, ATM, EFTPOS, telephone banking or internet banking, and into which you can add your takings, cash and other deposits. This is a basic facility through which all your business's financial transactions pass.

Merchant facilities

Merchant facilities give your customer's options when they pay by credit or debit card. A merchant facility allows you to process payments made on these cards either manually or electronically. They improve your cash flow, as your customers don't need to have cash in their account to pay.

Some questions to ask yourself before you meet with your bank or financial institution to set up a merchant facility are:

• Do you have a retail store where your customers walk in use their card to pay? You may need an EFTPOS terminal to swipe their cards
• Do you take most of your orders over the mail/phone/fax/internet? Do you need an EFTPOS terminal or is there an other way to process orders (such as a manual docket system)? Extra account fees might be charged for manual processing, and funds will not be available as quickly as EFTPOS.
• What volume of credit card transactions versus cash or other payment methods do you expect?
• Using merchant facilities speeds up payment and reduces administration costs (such as printing paper invoices). It avoids having to set up accounts for one-off transactions.

With so many options available, it's worth investigating what financial institutions can offer before you give them your business.

Account fees and charges

Banks and financial institutions charge for most transactions, and their fees can be a serious cost. With so many financial institutions to choose from, compare fees before choosing who to give your business. For more information on refinancing or switching.

Almost all banks, building societies and credit unions provide fee summary information on transaction account statements. Checking these regularly will help you plan your cash flow and will help you if you decide you should switch financial institution.

Source: Business Victoria