Your new business venture has turned out to be a roaring success and you are reaping huge profits. While this is great news, how are you managing the finances of your business? If your answer is, by constantly depositing and withdrawing money from a Savings Bank Account, then you have fallen prey to the rookie mistake of underestimating a Current Account.
Be it a freelancer or a sole proprietor or an established company, everyone needs a Current Account. So, what is a Current Account? A zero interest account that allows unlimited deposits and withdrawal for businesses with frequent banking transactions is referred to as a Current Account. A Current Account holder needs to maintain a minimum balance that varies from bank to bank. While large businesses can’t do without a Current Account, even start ups and freelancers can benefit hugely by maintaining one.
Here are a few advantages of a having a Current Account:
One of the best features of a Current Account is the ease with which it allows you to manage your finances. Not only can you deposit and withdraw money as many times you want without giving any prior notice to the bank, you can also benefit from convenient banking facilities like 24-hour phone banking, internet banking, doorstep banking, etc. A Current Account even allows you to deposit money or pay your creditors with the help of chargeless services like cheques and demand drafts.
Building business reputation
Image and reputation are two things which businesses strive to achieve and maintain over the years. Holding a Current Account for all your business transactions highlights your professionalism and is considered to be a sign of seriousness of towards the business. A Current Account also promotes the business as all the cheques and demand drafts are issued with the name of the business on it.
Though there is a requirement to maintain a minimum balance, banks allow Current Account holders to overdraw their balance for a temporary period of time, in order to deal with a money shortage. This overdraft facility can help you deal with short term financial crunches and is the biggest advantage of a Current Account over a Savings Account.
When applying for a loan to expand your business, lenders will certainly want to check the growth of the business and your credit worthiness. Holding a Current Account not only gives a clear picture of the finances of your business but you can also provide a letter from the bank stating your financial standing to the lenders and creditors.
Tracking business growth
Holding a single Savings Account for both your personal and business finances can be disastrous, as it becomes difficult to track the growth of your business. If your personal finances are healthy, you might not even know when your business runs into a loss, as you use the same account for all your monetary transactions. A Current Account helps you segregate your business finances from personal finances, letting you track if your business is reaping profits or running at a loss.
Now that you know the advantages of a Current Account, it’s time to move from a Savings Account to a Current Account, don’t you agree? If you are a sole proprietor or the owner of a startup or an established company, the best way to manage your finances is by opening a Current Account. So, what’re you waiting for?