Business bank accounts are considered the financial backbone of any business. Essentially, it’s where the business pools and keeps its financial resources for whatever purpose it may serve during the course of its operation. A well-managed business bank account could mean the difference between the success of the business and its untimely bankruptcy. One of the most recommended platforms for opening a business account is Chase Bank through their Chase business account. This January 2023, Chase is offering up to 300$ as a bonus for opening a business account with them.
In this article, we will discuss the strategies and tools that could help you manage a business bank account to maximize its utility for your business operations.
Separate Personal and Business Funds
This is one of the most fundamental concepts in financial management. Given the nature of a business bank account, it should only contain funds related to the business. It should never, in any circumstances, hold money that is owned by the business owner, investor, or employee. This strategy ensures that personal and business funds are distinct.
In the event that personal and business funds get mixed up, it could potentially introduce complexity in the process of accounting, budgeting, and detection of fraud. In separating personal and business funds, it’s generally a good idea to use vouchers or checks in disbursing funds from the business bank account. This is so that the process is duly recorded and that each disbursement is accounted for separately.
Online and Mobile Banking
The rise of the digital age has provided us with the ability to maximize the use of online platforms as well as our smartphones. This includes the ability to manage our bank accounts remotely through the internet and mobile banking apps. Online and mobile banking is critical when it comes to the effective management of business funds because it provides a high degree of convenience to the owners and managers in monitoring the real-time activity and movement of the funds. This is especially relevant for businesses with bigger and more complex operations where owners and managers would have to constantly look after the business account used by multiple branches in various transactions.
Establish A Budget and Cash Flow Plan
One of the main reasons why businesses set up separate bank accounts for their business affairs is to help achieve the financial goals and objectives of the business. These goals and objectives are typically laid out in detail through a budget or a cash flow plan. In line with this, the business bank account should be run according to this budget or plan. For instance, the company has allocated a fixed budget for its marketing expenses for the upcoming year. In that case, the business bank account should contain the entire budget, which should only see movements that are related to marketing. Creating a budget and a cash flow plan could also help the management to verify if they have already under or over budget. This will then serve as the basis for the financial decisions moving forward.
Financial Reporting and Accounting Software
If the business continues to see improvements in its performance, then it might also be a good idea to invest in dedicated financial reporting and accounting software. As the business operations grow more complex, it will require a more powerful system to keep track of all the movement and activity of cash. Although small businesses could do away with a manual recording of the movement of cash through spreadsheet applications, larger businesses, like corporations, would require a faster and more efficient system of doing so. Dedicated software for financial reporting and accounting could help expedite this entire process and will also ensure that the data is free of errors. The reports that the company is able to generate through the use of this type of software will be very important in creating budgets and plans for the future.