Five key considerations for SMEs when choosing a business bank account

Five key considerations for SMEs when choosing a business bank account
Mark Achiampong

Starting and running a business requires hard work and determination. Most entrepreneurs have to wear many hats, especially for the weeks and months shortly after they begin trading. And that pressure never really subsides, with attention needing to be given to almost every aspect of the business operations from sales and marketing to stock control, debtors and creditors, staff management and a host of other financial and operational priorities.

Choosing the right bank account for your business can ease a few of these pressure points by making sure your transactional banking needs are professionally taken care of – so that you can focus more of your time on growing your business, says Mark Achiampong, Head of Commercial and SME Banking at First National Bank.

With the impact of Covid, which has led to economic challenges across the continent further enhanced by the Russia-Ukraine war, choosing a banking partner that helps a business navigate the complexities of modern financial systems at a sustainable cost is critical to the SME.   To help our entrepreneurs with this process, we have created the following guidelines:

  1. Understand the difference between cost and value

When choosing a business bank account, it’s imperative that you don’t merely opt for the cheapest option.  Mark explains that there’s a difference between the cost and value of any bank account. “As a business owner, you are almost certainly cost-sensitive,” he explains, “but it’s far more important to look beyond the marketing hype often associated with these business accounts and dig deeper to find out exactly what, if any, value they are truly adding.”

While many new entrants and FinTechs compete based on features included in their apps, few solve the day-to-day challenges entrepreneurs face in running their businesses. Integration of business support tools – such as business registration, Invoicing, stocking,  Accounting and Payroll software to your bank account – has made First National Bank the best SME bank in South Africa and Africa. “The Business Toolkit available on First National Bank MobileApp provides an invaluable business advisory and bookkeeping benefits for all our customers in Ghana,” Mark says.

  1. Don’t just fall for ‘free’… Do your research

Most banks offer very compelling business banking propositions that come with low, or no, monthly account fees. While on the surface these accounts may look like they offer exceptional value – and some do, that’s not always the case. Mark cautions and recommends looking closer at each bank’s pricing schedules to understand the all-in cost of banking services before choosing a bank account for your business.

“The cost-efficiency of a no-monthly-fee business bank account really depends on what type of, and how much, banking you need to do on a day-to-day basis,” he explains. “Other than just the monthly account fee, it’s very important to also do a projection of your banking needs and then add up the  per transaction costs to make sure that the basket of transactions you use really do work out cheaper compared to an account which offers value added services and includes free transactions at a slightly higher monthly fee.”

While competitor comparisons of baskets of transactions are often done for products aimed at individual clients, these are not common for business accounts and so clients are left to do this exercise themselves.

He adds that while the headline costs of many bank accounts may appear similar, and some even quoted as free, customers may miss some of the other fees hidden away in the long, complex and not so easy to find or understand pricing schedules banks have.

So, for example, many banks charge nominal amounts for things like notifications of transactions in your account (AKA inContact at First National Bank), sending a payment notification to a supplier, account dormancy, transfers to own accounts or even debit orders for a service from the same bank, merchant device tally rolls and settlement fees, account confirmation letters – and even accessing your bank statements digitally.

All these ‘small’ costs eventually add up to a large monthly sum. However, the additional benefit of the free-three-month banking offer by First National Bank is still running for all new business accounts to take advantage of.

“First National Bank has been prioritising transparency and simplicity of our charges, and more importantly we have done away with many of these fees over the last few years to enable businesses do more business cost-effectively. And the cumulative savings a business client enjoys as a result more than offset the transparent packaged account fees after the initial three months,” adds Mark.

  1. Make sure you can bank the way you want

There’s a massive shift toward digital, platform-driven banking – and that’s a good thing for business owners because it puts full control over their banking firmly back in their hands. For this reason, Mark encourages small business owners not to underestimate the value and cost-effectiveness of convenient banking.

“A strong digital capability should be a top consideration for any business owner when choosing a bank,” he explains, “because not only will digital banking save you money, but it also allows you to make and receive payments quickly and to sweep spare cash into your investment account, where it can earn interest until you need for it.”

To complement the intervention of having business customers save on travel time to carry out transactions, First National Bank has launched BizHub – a virtual help centre – to process customer requests and transactions outside the conventional call centre, branches and relationship managers’ support.

  1. Get an account that can evolve with your growing business

Given that the end-goal of any small business is to grow, it’s essential that your bank account can undertake that journey with it. Mark affirmed that it’s vital to spend some time thinking very carefully about your business goals, and then choosing an entry level account which not only helps you achieve them but can also keep adding value and functionality as your business expands.

“Don’t be shy to ask the bank consultant about the account options that you could upgrade to in future as your needs and complexity grows,” he explains. The benefit of banking with a fully integrated financial services provider is that as your business grows and requires card acceptance capabilities, business insurance, specialised finance or forex we are then able to offer these to you seamlessly.

  1. Make sure the rewards are… well, rewarding

Rewards programmes have become somewhat a ‘flavour of the day’ for institutions wanting to promote their offering to individuals in an increasingly competitive environment. And these rewards programmes are now also being extended to business bank account holders. “You really shouldn’t be paying any fee to subscribe for a program that is supposed to reward you for your loyalty or good banking behaviours,” Mark says.

We have anticipated the real needs of our business customers and followed through to build a comprehensive suite of value offerings for customers who open or run their business accounts with First National Bank. Our focus is to enable you choose a banking service offering that suits the size and needs your business, by providing  you guidance, best practices and progressively delivering a digital facilitation that is safe and convenient to your business.

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