The Most Useful Features of Business Banking Apps
Does your bank's app have features that make your banking processes more efficient? Take a look at our list of the most useful features business banking apps should have today to find out.
In an ideal world, your business would never run out of cash. You would have a robust, focused business budget, pay all your bills on time and perfectly manage your cash flow. Unfortunately, the real world is far from ideal. Your bills are due right now, customers are taking too long to pay invoices and you need to stay afloat. It’s times like these that you might consider using your business bank account’s overdraft capabilities.
However, when it comes to “going into the red,” it’s vital to understand and manage your overdraft and other bank charges to minimize what you’ll pay in fees. Here’s our guide to doing just that.
Business overdrafts are convenient, but they can be very costly. If you’re having to use your overdraft capability frequently, it could be a sign of other systemic issues in your business. Make sure you analyze your pricing and expenses to maximize your profit margins.
Take steps now to reduce how much cash you’re losing and develop a healthier cash flow. Overdrafts should really be for emergencies only — if you need to free up cash, a business loan or credit card could be a better solution.
Here are some typical overdraft fees for comparison:
Per Item Fee Amount
of fees per day
fees per day
Bank of America
Fifth Third Bank
Let’s explore what happens if you don’t manage your finances properly and have to go into debt every month. We’ll assume the following:
This is how that looks in practice:
As you can see, even if your business reliably takes in more than it spends, timing can be very costly. In this example, it takes five months to get a stable cash flow. In that time, you will pay out $1,400 in overdraft charges — nearly 2 percent of your gross revenue and 14 percent of your net profit. Ouch!
There are several different types of overdraft fees, which include:
The simplest way to avoid overdraft charges is not to go overdrawn in the first place. But unfortunately, that’s easier said than done! Here are some practical things you can do to reduce your chance of running out of money:
Some banks have low or non-existent overdraft fees. These include:
Remember that regularly going overdrawn is normally a sign of deeper issues with your business. Rather than relying on overdrafts, focus instead on maximizing your profits and building a cash buffer — and consider other financing options as good alternatives.
Credit cards can also help your business develop a credit history, which is important should you want to secure business financing or more favorable credit terms in the future.
You might consider adding Revolut to your repertoire — its easy international payments, prepaid business cards, and open API offer a strong option for businesses.
The decision to bank with a given institution could invariably lead to banking issues, and those could muck up the course of your business. So let’s take the topic of overdraft fees head-on, starting with a better glimpse at exactly what they are and how they affect you.