Business Banking Explained
How is SME banking different from what is offered to large enterprises or, for that matter, even retail/ personal banking? Can’t I just keep using my personal account for my small business?
It is advisable to use a business current account for running a business. Personal banking accounts will typically have caps on chequebook usage and volumes of payments/ receipts wherein transactions beyond a cut-off limit may attract high charges. Business accounts on the other hand can be customised to meet the requirements of your businesses and help you save a great deal on banking charges. For example, if you have a large number of payments in EUR, your bank will be willing to offer you attractive pricing on such transfers based on volumes. If you need to have cash picked up from multiple points and credited to your account, a business account can help you do the same easily. There can be a number of such scenarios where you can achieve efficiency in terms of process and costs using a business account. In addition, having separate business accounts helps to meet compliance, disclosure and regulatory requirements as applicable. Increasingly, banks the world over are required to adhere to stricter compliance standards. Using separate accounts helps in avoiding queries related to such aspects.
Can I switch between different types of business accounts as my business needs evolve? Is the transition smooth?
Yes, it is possible to do so. You can hold multiple accounts at the same time depending on your business account. For example, you may hold a checking account in AED and a call account in USD or EUR at the same time if you have payables and receivables in these currencies. It is also possible to close any operating current/call account at any point in time, subject to the settlement of pending bank charges, if any. You will be able to avail facilities such as Internet Banking or Mobile Banking on your new account.
Would my current personal debt (car, credit card, etc) make it less likely that I will get a business loan?
This would really be a case-specific decision. To illustrate, for a proprietorship firm, indebtedness of the proprietor is a critical factor in credit decisions. However, this is really a case-specific decision, taking into account multiple factors.
I noticed that ADCB offers escrow services for real estate?
I’d like to use escrow payment for my trading business in order to minimise the risk of fraud. Do you provide that as well? I t is possible to structure case-specific solutions which allow businesses to manage uncertainties regarding cash flows. However, the escrow services for the real estate sector are governed by applicable regulations from RERA (in Dubai) or similar authorities in other emirates.
I’m not very happy with my current bank. I feel they treat me shabbily because I’m not a large multinational and neither do I have the time or resources to hire a fulltime finance exper t for my bank dealings. Is there an easy way to get on with business banking?
This is where an SME specialist can help you. It is advisable to bank with an institution with specialised SME offerings. Typically such a bank will provide SME Relationship Officers who only manage SME accounts and hence there is no dilution of focus. Such a bank will also offer lending solutions whereby the eligibility criteria are designed to suit the small business segment. Banks nowadays offer several lending products whereby the eligibility is based on factors like bank account conduct, vintage in business, promoter’s profile, and so on, and does not require audited financials for small business lending. I am happy to inform you that ADCB offers such packages to small business customers.
With the introduction of the Wage Protection System, it’s become even more imperative that we streamline salary transfers. Do you manage payroll services? Are there different packages based on employee numbers?
Yes, we offer a full gamut of WPS solutions. We will be happy to structure an appropriate solution customised to your business.