A current account is one of the types of deposit accounts exclusively operated for business enterprises. It works like a savings account but has stand-alone benefits in terms of unlimited transactions, extended overdraft, and easy funding facilities. A current account is an earmarked account for business transactions. There is no interest charged or paid on a business's current account. But the requirement of minimum balance is higher compared to a normal savings account.
Let us now look into the 5 asic benefits of current accounts for businesses:
1.Transact With No Minimum Balance - Overdraft With Current Account
The promising feature of a current account is it comes with an overdraft facility. If your current account runs out of minimum balance, the overdraft facility for a current account can come to the rescue. It helps to manage important vendor payments and operating expenses when you are waiting for a lump sum receipt. The income when you receive is set off against the amount overdrawn and your current account is brought back to the regular status. This facility is a breathing window for all business owners who have a cash crunch. Also, the interest rate on an overdraft can typically range between 10% to 13%. Hence the entrepreneurs find it convenient to go for an overdraft facility attached to a current account rather than going for new funding. This is the differentiating factor of having a current account over a normal savings account. A savings account cannot be overdrawn at any time.
2.No Limitation On The Volume Or Amount Of Transactions
Businesses constantly evolve and grow. It can be an increase in the volume of sales, the addition of business or product lines, opening new branch offices, and expanding geographies. When you hold a current account for your business, you are not charged additionally or restricted when your business grows. There is no limit on the number and amount of transactions. You can transact seamlessly and the current account acts as a partner in your business growth.
3. Constant Support
The amount of operational support you get from your banker for a current account is phenomenal compared to a savings account.
- You are provided with unlimited cheque leaves and deposit books. All this is free of charge.
- The banker will frequently update you about your cheque clearance and discounting of bills.
- You will get timely notifications whenever you are about to run out of balance.
- You can request an increase in overdraft limits based on a good relationship with your banker.
4. A Leverage For Loans
Getting a new term loan or equipment loan can be a herculean task with a limited financial background to support. Your current account is a blueprint of your financial standing and the performance of your business. Your banker has a fair understanding of your liquidity, repayment capacity, and the cash flow of your business when you have a current account. Hence you can get a term loan or a cash credit facility with ease and attractive interest rates. Instead of starting from scratch for funding, you can start with a current account for your business and establish your business stability.
5. Transparency And Visibility
A current account for business is straight like any other type of bank account. The cash inflow, outflow, withdrawal over limits, times of withdrawal, number of cheque transactions, online transfers, and discounting of bills are all reported. Hence you have a structured track record of all the important business transactions. A business current account indirectly aids in the proper maintenance of books of accounts for your business.
Also Read: Apply Business Loan Online
- Separation of personal and business transactions
- Easy to get allied banking facilities like letters of credit, discounting of bills, etc.
- Enables smooth business transactions.
- Unlimited deposits with the home branch.
Having a current account for your business can help in so many ways. Your current account can act as a complete record of your business trend. It can help in projecting your future cash flows as well. Get a current account for your business and get set.
FAQ 5 Basic Benefits of Current Account for Businesses
1:What is the eligibility for opening a current account for a business?
Any individual is a sole proprietor, partnership firm, limited liability partnership, private and public limited company, Hindu Undivided Family can open a current account for business with the supporting documents.
2:What are all the documents required for opening a current account?
Business PAN card, partnership deed, certificate of incorporation, resolution for authorised signatories, Aadhar card, Voter ID, latest utility bills, and last 6 months’ bank account statements are the documents.
3:What are the main features of a current account for a business?
A business can have only one current account with a bank.
A current account does not charge or pay an interest.
You need to maintain a higher minimum balance than a savings account.
4:What is the minimum balance for operating a current account?
The Monthly Average Balance (MAB) ranges between Rs 10,000 and Rs 75,000 and varies according to banks.
5:How to get an overdraft facility for my current account?
You can get in touch with your banker for the same. Some banks offer pre-approved overdraft facilities based on the transactions in the current account.
6:What are the charges associated with a current account?
NEFT/IMPS charges, non-maintenance charges, monthly service charges, annual credit or debit card charges, cheque return charges, and convenience charges are some of the charges associated with a current account.
7:What is a Zero balance current account?
It is a current account for businesses with no mandatory requirement to maintain a minimum monthly average balance.