What are some common business banking mistakes start-ups make?
Managing the finances of your startup is no easy task. You’re bound to learn and improve as you go along, but no one wants to flounder with no clue of what they’re doing.
One of the first steps in ensuring that your finances are well managed is by creating a business bank account. You can avoid many business banking mistakes by choosing the right banking partner.
To do this, you want to get yourself acquainted with the most common banking mistakes businesses make, as well as the benefits you can reap by avoiding them.
Business bank accounts are not the same as your personal bank account. You’ll have different banking needs as an individual and as a startup.
When you choose the banking partner for your business, some features that you want to have to include startup-friendly fees, reward programs, accounting integration, as well as vendor payouts, and payroll management.
Choose a business bank account that can help you with your business growth.
One of the most common banking mistakes is taking bank loans when you don’t actually need them for your business. Many banking partners will offer you loans, but this doesn’t mean that you have to take them.
You should first ask yourself whether your business needs a bank loan. Bank loans often have high-interest rates. When you’re early into the business, this could lead to very high risks for your startup.
You don’t want to be personally liable for your company expenses. Using your personal credit card for business expenses is one of the big business banking mistakes, as it could and most likely will impact your personal credit score.
Spending on your personal credit card also means that you have to get reimbursed by the company. You can end up with delayed credit card payments if you’re not reimbursed on time, which will lead to high penalty fees.
From a business perspective, you’d also be making business banking mistakes by swiping your personal card as it makes it harder to track your business expenses.
Reconciliation is a process done to make sure all your financial records are accurate to your actual transactions.
To do this, you’ll compare your bank accounts with your bookkeeping records. Not reconciling or failing to do so regularly are business banking mistakes.
Reconciling your bank accounts regularly will not only help you detect errors and fraud attempts but also allow you to analyze your records and allocate your resources better based on them.
There are many business banking mistakes that a startup could make, but one mistake that needs to be rectified immediately is if your business doesn’t have its own designated bank account.
You need to separate your business and personal expenses. When you combine the two, figuring out which payment is for what purpose could be complex.
Separating your business expenses from your personal expenses through the use of a designated business bank account will not only help you track your finances better and enable easier accounting.
Additionally, it will make loan applications simpler when you have to submit your bank statements.
Managing and doing your financial processes take time. One of the business banking mistakes that you don’t want to make is performing all daily financial operations manually.
Your time will be spent doing nothing else but keying in payments. Automation can help you with vendor management, payroll, and taxes.
You can schedule automatic pre-approved payments and even make the whole approval process simpler and faster.
Being on top of your accounting processes, including managing your payroll, can prove to be tedious work. If you choose to do the work manually, not only is it time-consuming, but you also run into the risk of manual data entry errors.
Spending your time combing through these errors is inefficient, especially in the early stages of your business where you should be maximizing all your time and effort.
With the help of automation, however, you can have an easier time managing your payroll. Your overall accounting processes will also go smoother with easier, automated reconciliation.
Hidden charges can easily add up. When no awareness is not brought to these hidden charges, they could result in a bleed in your expenses. Admin fees, for example, can be quite expensive.
When they’re not considered properly, they could be mistakes. Business bank account providers should be transparent with their fees.
You want to know them up front and be aware of all your fees, including the interest rates and late payment penalties for a credit line that you might take.
Without multi-currency bank accounts, you would be receiving payments that are less than what your invoice states or having to pay suppliers more by compensating for the expensive transfer and conversion fees.
When you’re hindered by the hassles of international transfers, it will be difficult for you to grow your business or conduct your business internationally.
Many startups underestimate their expenses. This is the last thing that you want to do, as it could make it difficult for you to manage budget and department expenses.
The big problem lies in the fact that not all banking partners offer spending controls. You may not be aware of what exactly your business is spending on, leading to business banking mistakes that will bleed your cash flow.
When you don’t apply the right controls, you’re bound to spend way more than you expected. It can be too late when you realize that your expenses are too high.
Having multi-currency wallets with your business banking partner can save you a lot of time and money. Say you have foreign customers trying to pay for your product.
They don’t have to rely on international transfers with high conversion markup fees to send payments to your business.
You can receive the exact amount of money stated on your invoice in their foreign currency rather than let transfer fees cut into it. Then, when the conversion rates work in your favor, you can simply convert to your local currency.
When you have a designated business bank account, you can avoid common banking mistakes such as underestimating your expenses and overspending.
A business bank account helps you be aware of what exactly are your business expenses, making sure that you don’t miss any transactions that could otherwise get lost in your personal bank account if you conduct business with it.
There won’t be unexpected expenses, helping you reduce your operating costs. With a business bank account, you could also get rewards programs and earn cashback to help you cut your costs.
One of the benefits of having a business bank account is that you can search for a banking partner that supports your startup by offering you business-friendly fees.
Modern business banking understands that businesses that are just starting up will have different uses from already established businesses.
You can get a banking plan according to your needs and establish lower transaction fees, helping you maximize your revenue and allowing you to use your resources elsewhere. Lower fees will net you better savings.
Having a modern business bank account comes with the perk of having automation at the tips of your fingers.
Business banking mistakes like not performing reconciliation or manually doing your accounting can easily be avoided when your business bank account offers inbuilt automation.
You would be saving a lot of time by doing your payroll processes automatically and scheduling out payments. Easily and automatically reconcile your bank account with your books to avoid accounting errors.
Most modern business banking partners offer you customer support to help you ensure that all your banking experience goes smoothly.
With the right banking partner, you can get access to customer support 24/7, which means that you don’t have to wait around for a long time to have your queries resolved.
Should you make business banking mistakes, customer support could help you solve them right away.
Gone are the days when you have to rely on going to the bank every single time you want information regarding your business bank account.
These days, you can access a web-based dashboard or a mobile app that allows you to get an overview of your account.
Make sure that you pick a modern business banking partner to gain access to better UI and have a smoother business bank user experience. You can do transactions, make payments, and solve queries all through your devices.
With a banking partner that offers you a dashboard to help control your spending, you no longer have to worry about leaks in your cash flow. Know what your spending looks like at all times and control it through tracking.
Modern business bank accounts typically also give you the ability to create budgets and set spending limits.
Control your finances better by picking a banking partner that has spending controls integrated right with your account to avoid any business banking mistakes.
With a modern business banking partner like Volopay, you can manage your startup finances smoothly without jumping through hoops.
Not only will your funds be kept in a secure, separate bank account from your personal account, but you can also access a number of benefits.
Hold money in multiple currencies without having to switch from one account to another. View all your funds on one dashboard and easily choose which currency wallet you want to spend from when making your payments.
You can track all your business expenses in one platform while enjoying a $0 transfer fee to help you save money.
The month-end closing of your books can also be hassle-free with automated accounting integrated with your business bank account. Your business banking mistakes can be fixed through one business account.