This week on The Entrepreneur’s Corner, we get some business tips from Mrs Ramat Ebella Whajah Ellis. She’s a Banking Executive with years of experience who’s willing to share a bit of that experience with us. This instalment focuses on managing the finances of your business. The emphasis is on the role that banks can play in your business’ survivability and success.
Banks can be an important tool for businesses. Even if you believe that your business is a small one, there are benefits that come with simply banking your business proceeds. Mrs Whajah Ellis takes us through exactly how you can set yourself up for success by taking advantage of systems that are already in place.
You need To Build A Relationship With A Bank
As a business, you need to establish a rapport with a bank. Let’s say that you had to ask someone for money. Would you ask a stranger and expect them to say yes? No, that’s unlikely. Instead, you would expect someone who knows you to an extent—that’s someone who trusts you—to give you the money that you need.
The analogy applies to banks. You might need some support for your business sometime in the future. Maybe for expansion or just some help to get your business through tough times. And the best way to ensure that you have access to that help, should you need it, is to have a good relationship with a bank.
According to Ebella Whajah Ellis, banking the proceeds of your business allows a bank to get to know you—financially. Simply creating a business account and operating will give you some credibility with any bank. An important thing to note is that even if you haven’t registered your business; even if you are a sole proprietor, you can create a separate bank account and use that for business.
Here are some other benefits of banking your business proceeds.
Access To Loans For Both You And Your Employees
Like we’ve said earlier, building a relationship with a bank makes it easier for you to access loans. How well you run your account gives a bank an idea of what your business is. It helps them better understand your cash flow, which makes it easier for them to provide you with a loan.
Similarly, when you process your employee remunerations through a bank, you make it easier for them to access the credit facilities of that bank.
You Keep Your Business And Personal Finances Separate
Another advantage of a dedicated business account is that it enables you to keep money from your business and your personal money separate. It can be easy to spend your business’ profits when the money is rather easily accessible to you. Another point in the same vein … when you keep money from your business together with your personal money, it can be difficult to have that mental separation that prevents you from spending it.
So, it’s a good idea, no matter what stage of business you’re at, to bank your profits. That way, there’s a clear line between your own money and the business’ money. Otherwise, the possibility of eating into your business money is high.
It Helps With Record Keeping
If you’re a sole proprietor or someone who just started a business, chances are that your business isn’t formally structured. In cases like this, it is also likely that you aren’t keeping records of your business transactions.
Having an account for your business will allow you to have a way of accessing your business’ transaction history. Simply by getting your bank statement, you can have an overview of the various ins and outs of your business.
It Gives You Access To A Digital Ecosystem
Creating a business account allows you access to some great digital services. For instance, right now, ‘mobile money to bank account’ type transfers are easily accessible from any registered mobile money provider. This cuts out the need to physically go to the bank and reduces any lag that might hinder operating your business account.
Speaking of digital services, there are also platforms that will make it easy to send money to suppliers through Bank-to-Bank transfers. These and other digital innovations make a bank account an asset in your business dealings.
The Entrepreneur’s Corner is a weekly series that brings you business tips and insights from people with real-world business experience.
Source: Africa Skills Hub