As a business owner, a current account is a crucial financial tool that allows you to manage your money efficiently. It is a type of bank account that offers various benefits, including easy access to funds, overdraft facilities, and online banking services. Understanding the advantages of having a current account can help you make informed decisions about your business’s financial management.
Do you have a business and are contemplating whether or not to open a separate current account to carry all your business expenses through that? Here are all the benefits of a current account that every business owner should know.
Current Account Benefits if You Own a Business
- Overdraft Facility
Now imagine, as a business owner, you have reached your sales target of the month, but your payments are due next month. But you still have some monthly bills to pay at the end before you receive the payment due next month. And to top it up, what if your bank account’s balance hits zero before you can pay off any dues?
Here’s when the facility of overdraft comes to your rescue! One of the many benefits of a current account is the overdraft facility, where you can withdraw more than the account’s available balance up to a certain limit. You may or may not be charged an interest rate on the withdrawn amount, depending on your transaction history, bank terms and conditions, and your relationship with the bank.
- Unlimited Transactions
Another benefit of a current account is the facility for making unlimited transactions. As a business owner, making transactions from the bank can be tricky with some of the regular savings accounts. With the uncertainty of when and how many transactions you’ll need to make for the month, a regular savings account or any other account does not usually allow unlimited transactions for a business owner. In such situations, it’s best to open a current account.
Current account benefits business owners by allowing them to make unlimited transactions. Businesses need high-level liquidity when it comes to having access to funds, and with a current account, you can rest assured that all your business activities function smoothly.
- Secure Transactions
Along with the number of unlimited transactions, a current account also benefits a business owner by providing a safe and secure gateway for completing transactions. So, whether you make high-volume transactions or frequently have to make even the smallest of transactions, you can take control of your money in the account with complete security and safety without thinking twice.
- Abundant Cheque Leaves
Opening a savings account gives you access to one chequebook for the entire year. And if you use up all of the cheque leaves, you would have to visit the bank branch to issue a new one. While it’s not a huge hassle for normal occasions because when was the last time to wrote a cheque to someone outside your business activities? Rarely remember it, right?
A savings account is great for someone who doesn’t get to use their chequebooks often. But a current account is better for business owners as one of the benefits of a current account also includes having unlimited access to cheque leaves. You get to have a specific number of cheques every month that are free of charge. So, you can get a new chequebook every month for all your business transactions.
- Fund Separation
Running a business comes with the responsibility of storing your funds. You need to be careful to segregate your personal funds from your business assets. A current account benefits you by disjoining your personal and business assets and making cash flow tracking more manageable. This makes budgeting and planning easier for both your personal finances and business needs.
Do You Need a Separate Current Account?
A savings account and a current account offer a similar range of benefits for business owners since today, most banks and other financial institutions offer even a savings account with NEFT, demand drafts, unlimited deposits and withdrawals, and pay orders. Some financial institutions even allow all of this for a savings account free of charge.
Having separate accounts as a business owner also helps you with finance management. But when it comes to choosing between a current or savings account, it’s up to you and your financial goals as a business owner. If you don’t want to mix up business with your personal expenses, keeping both accounts separated is better.