One of the key foundations of any business is to choose a good banking partner. When you are getting started in your new business, start by deciding which services you need. Make a list, then prioritse your needs. Go out, go shopping, and evaluate which bank or banks offer what you need. Don’t just look at the costs; look at the other factors including service standards and reliability.
Banks will change, their services will change. Start shopping and keep shopping.
You can look locally or overseas, depending on your business needs. Don’t forget that some branches near your place of business may be more efficient than head office. They may be less efficient too.
At each bank you visit, ask for the business banker, don’t get stuck with a Trainee. If you are looking for credit, meet the loan officer assigned to commercial customers. Talk through your needs.
1) How high a lending limit can they authorise without needing approval from a higher authority?
2) Do they offer SME loans, do they like to make them, and what volume of them do they close?
The answers will give you a good indication of how much the bank wants to work with you. You don’t want to open a bank account, then be disappointed by poor service, and then have to close it.
Your ultimate test may be to apply for a line of credit. You may get responses that vary from detailed terms to unattractive offers or just no reply. In boom times you may even be offered overly attractive amounts of credit. This is what drove the sub-prime disaster. So don’t accept more than you need.
In Singapore, the three most popular banking partners for SMEs are DBS, OCBC and Maybank. All three banks offer corporate accounts that have been specifically positioned to market their services to start-ups and SMEs.
DBS offers a Digital Account that is positioned to make banking for new businesses user friendly. OCBC has just launched a new corporate account specifically for start-ups and SMEs, the Business Growth Account. There is also Maybank Singapore with their PremierBiz Account.
Making and receiving payments, payroll and tax can be made easy with the correct accounting software. These will need to be linked to your business account. Don’t forget, don’t confuse your business account and your personal account.
Transparency in pricing is something that should not be taken for granted when choosing your banking partner. Comprehensive online banking services, that you can access through a smartphone, makes life simple in the digital economy where finances can shift in a moment.
You can be drawn to a long list of initial sweeteners thrown in to lure you into using a bank’s services. The problem with starter promotions is that they run out eventually, and you may find yourself in trouble if you are neither willing nor able to pay for more.
Look at the bigger picture and choose a bank that gives you the features outright, without the use of promotions.
The key to choosing the right banking partner is finding one that continually offers the services that your business needs, at the right price, in a fast and easy way.