What you didn't know about current accounts |
Posted: July 19, 2018 |
As an increasing number of start-ups set up operations and flourish all over the land, the business banking ecosystem in the country has been in a state of flux. From sole proprietors to unions, and from NGOs to multinational companies, the need for business current accounts is a big one. Most banks in the country offer current accounts for business. Before opening a current account, do consider a few facts that you may not be aware of: * It can be opened online. Many banks today insist on companies or individuals filling out a lot of application forms for opening the current account. Your company should tie up with a leading bank that offers the chance to open the current account online. Opening the current account online is convenient and cost effective. The best banks charge less for processing the online current account application, and you can apply for it without signing any paperwork or even visiting the bank branch. * It improves your credit history. This is an often overlooked fact about current accounts: if you maintain it properly, without any cheque bounces, loan repayment defaults, or account balances going below specified limits, then your credit score improves. A business current account should always have a high credit score, since it helps the company secure funding in the future. Your bank will be happy to extend an SME or other kind of business loan to your company if it exhibits responsible financial behaviour. * It does not attract interest on deposits. Unlike savings accounts, the current account deposits are not paid any interest by the bank. This is in contrast to the savings account deposits, where the bank pays a quarterly interest on the amount collected in the account. Do factor this element in when you open a current account for your business as a sole proprietor – but do maintain account balances as required, so as not to attract penalties from the bank. * It shows a high potential for automation. In the age of digitisation, not only can you open a current account online, but you can also automate it to a large extent. For example, you can set ECS payments for office utility bills, or loan repayments, or even monthly vendor payments. Automating the payments saves time that you can devote to business development. Meanwhile, if you are a sole proprietor holding savings and current accounts with the same bank, you may even be able to link all the accounts together under the same PAN. Do check your bank’s entire suite of automated services in business banking linked to your current account when you sign up for it.
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