Actividad cinco

requirements that your business needs to operate effectively. Primarily, this will include both deposit accounts and payment services provided by your bank or other financial institution (e.g. credit union, building society).

All businesses need to have some transactional banking services. There are essentially two types of transaction banking groups:

• Transaction banking • Merchant Facilities

Transactional banking products

When deciding what type of transaction banking products your business will need, it is important to look at the type of business you are offering to your customers, the requirements from your suppliers and how you want to manage your cashflow. Although many businesses believe that paying by cheque offers a few extra days before the funds are withdrawn from the bank account, in reality, paying by cheque provides a level of uncertainty because you cannot be sure when the cheque will be presented.

With many options available to business today, it is wise to ask your bank account manager to assist in choosing the right products that will help manage cashflow and reduce the need for time spent in managing all your banking requirements.

The list below provides the most common transaction banking products currently available:

• Electronic Desktop/Internet Banking

• Credits to accounts – electronically, manually or by direct credit

• Debits to accounts – electronically, by manual cheque, EFT, or overseas transactions

• Bpay via credit card • Bpay via debit card

• Overdraft and other limit facilities • Cheque production or cashing facilities

• Lockbox – the processing of a mailed cheque, money order or credit card payment

• Payroll processing arrangements.

Transactional banking forms part of the overall financing of your business. The everyday banking requirements should be considered carefully to ensure the payments in your business are efficient and effective.

HINT

Choosing the most appropriate transactional banking products will assist

in managing cashflow and improving profitability.

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Your banker can assist you in choosing the most appropriate transactional banking products for your

Merchant facilities

Merchant facilities provide your customers with various options to pay by either a credit or debit card. These facilities enable you to process payments made on these cards either manually or electronically.

Some of the benefits of having merchant facilities include:

• guaranteed payment within 48 hours of the

purchase being made

• improved cashflow and thus business performance

• reduced exposure to keeping cash on your

premises

• reduced administration costs. You no longer have to wait for a purchase order, issue paper invoices or chase payment.

• no need for establishing accounts for one-off or infrequent transactions • environmental protection (by reducing the use of paper).

When considering merchant facilities, it is best to speak to your bank account manager to discuss the best facilities for your business. Some of the questions to consider before meeting with your bank are:

• Do you have a retail store where your customers walk in and pay for the goods with their card? You may need an EFTPOS terminal to swipe their cards. • Do you take the majority of your orders over the mail/phone/fax/internet? Do

you need an EFTPOS terminal or is there an alternative method of processing? • Do you need a combination of the two options above? Can you have an

EFTPOS terminal to swipe the cards of walk-in clients but key-enter the details of “remote” orders?

• Would a mobile ETPOS/ credit card machine assist with quicker payments? • What volume of credit card, cash, or other payment methods do you expect?

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By introducing merchant facilities, it is possible your business will benefit from quicker payment, significant reduction in invoice queries and credit control calls

and, of course, improved cashflow.

HINT

Merchant facilities provide a real benefit

to your business cashflow: your customers do not necessarily need to have cash in the bank

to pay for your goods or services.

Unfortunately, most banks and financial institutions do not provide transactional services for free. In some instances (particularly where your margins are very small), the fees related to these services can substantially impact on the profitability of your business. With so many financial institutions providing these services, you would be wise to consider the fee structure from a number of providers before deciding on the best provider. (See the section below on how to switch banks.)

It is common knowledge that most small businesses do not know how much they are paying in bank fees. This can be attributed to the fact that they do not spend time reviewing the transactional banking arrangements and some banks may not make it easy to clearly establish the total amount of fees being charged.

HINT

Regular review of your transactional banking services

will guarantee you know how much you are paying for these

services, and ensure you are using transactional services that best suit

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By allocating all bank fees in a separate account, you will be able to clearly identify any increases in fees that could be impacting your profitability.

Chapter 9: Importing and Exporting Finance