Some banks can be parasitic when it comes to charges: withdrawal charges, ATM card maintenance charges, and many other strange fees can be a burden on your business unless you take immediate action to find out why your account balance continues to deplete.
In one of our articles, we elaborated on things you need to know before setting up a corporate account and charges involved for your entrepreneurial business, the details are available at: https://infomediang.com/current-account-maintenance-fee-in-nigeria
As a business you set on an entrepreneurial journey, you need a financial institution that aligns with your financial goals.
NOTE: Current account can charge a variety of bank fees. Most times, you’re required to keep a minimum average monthly balance in your account. It also has a maximum number of transactions that you can make per month.
That’s why it is very important for you to know how many charges you can bear so that the largest percentage of your profits doesn’t go into the bank’s purse.
Some of the questions a new small business owner needs to ask himself when setting out for a business account include:
- What’s the worth of my business?
- What’s my monthly projection in terms of revenue?
What’s the best bank suitable for my financial needs?
- Can I get a savings account that can take up to N5M as a maximum deposit?
Providing answers to these questions would guide you on ways to reduce banking charges on your business account.
So, what are the practical ways to reduce bank charges on your startup?
- Change Your Banks If Present One Sucks
- Close Inactive Bank Account
- Consider Customer-Friendly Bank
- Due Diligence Before Opening Choosing A Bank
- Consider Savings Account If You’re Starting Small
Change Your Banks If Present One Sucks
In the past, there was nothing like zero account balance, but since one of the new generation banks launched zero account balance, which gives you the freedom to withdraw everything in your account, other banks had no choice but to jump in because they were most likely to lose customers.
The point is banks need customers to keep their operation going, that’s one of the major ways through which they earn revenue.
Don’t be in the trap of any bank if their terms and conditions are hurting your business. The best thing is to find the one that aligns with your business goals. For instance, bank maintenance fees can be negotiated. If bank C says no, try Bank D.
Close Inactive Bank Account
The best practice when you are starting off as an entrepreneur is to separate your personal account from your business account.
But we’ve seen small business owners who use personal accounts to manage their business finances, tracking expenses and revenue is the key when you do this.
In a situation where you’ve decided to choose a favourable bank for your business, it’s advisable to close an inactive bank account. This way you don’t continue to incur charges.
Indirectly, the charges you accumulate on other accounts might also affect the one you use for your business if you don’t take a step to shut the inactive one. This is one of the ways to reduce banking charges
Consider Customer-Friendly Bank
The bank that began zero account balance in Nigeria was the first to use customer-friendliness to win hundreds of customers when it was “fighting’ to get millions of Nigerians on its database.
Today, the same bank has gone from good to worst than the old players. Its customer service which used to be its comparative advantage has diminished beyond imagination.
So, do your due diligence before opening a bank account for your business. It will go a long way in helping your business grow.
You need someone who will promptly respond to your challenges at the appropriate time.
Unfortunately, most Nigerian banks have poor customer relations, they treat their customers as if they are doing them a favour.
Due Diligence Before Opening Choosing A Bank
As earlier pointed out, find out from colleagues the charges of their bank, compare and choose the best that will quicken your journey in achieving your business goals.
Most times, we see the T&C of account opening form as long to read, it’s very important to carefully study and digest the rules that guide the kind of account you want to open.
This will help you in the long run to reduce bank charges on your business. Also, be sure that your bank is accessible and have an assigned account officer to you.
Consider Savings Account If You’re Starting Small
Several questions have been raised about the best account for an entrepreneur who is just setting up her business: To choose a current or savings account?
The fact is…
There is indeed a savings account that has the capacity to effectively suit your financial needs, ask the customer service unit the maximum limit a saving can accommodate.
Some savings accounts in Nigeria can take as much as N5,000,000 or more, you can consider this if you’re concerned about limitations.
Weigh the pros and cons before making the best decision. You must however ask yourself if you would need a chequebook or a withdrawal booklet.
Also, you need to find a balance between the services and the fees in different banks available to you.
For instance, you may not need a current account if your business is relatively young and manages a small number of transactions per month,
This is one of the practical ways to put in check charges that could affect the revenue of your business.
Use Banking Apps or Internet Banking
Do you know that it’s more cost-effective to use a banking app or internet banking than queuing at the banking hall?
Make the two mediums your preferred option, app and internet banking has numerous merits over the conventional way of banking.
In Nigeria for instance, you will be charged almost N7 for USSD code if you’re purchasing an N100 airtime, meaning you’d pay almost N107.
If you buy the same airtime using the bank app or internet banking, you won’t pay extra charges
Don’t open a current account if your business doesn’t need a chequebook or handles higher amounts like N10, 000, 000, N20,000,000 or more. This is to reduce bank charges on your promising and growing business.
Use a savings account if you don’t deal with many transactions per month
Opt for a basic account to avoid running into account maintenance charges that could be parasitic to your young business.
What other measures have you taken to reduce bank charges on your business lately? Share your thoughts with us.