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A deposit account explicitly designed for the needs of businesses is known as a current account. It assists organisations in handling a sizable volume of daily transactions and provides features and services that simplify planning and managing finances.
Your first step toward corporate legitimacy, as well as toward more accessible and more ordered financial operations, is opening a current account. The advantages of current accounts are briefly discussed here.
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What advantages do current accounts offer to startups?
Opening a current account has numerous advantages, from organising your company’s finances to giving your financial activities respectability.
1) No money, no worries
Imagine this. The month is coming to a close.
On the one hand, you’ve made sales, but your payments haven’t yet arrived and aren’t anticipated to arrive for a few more days.
On the other hand, you have bills that must be paid in time, and their due dates fall before you are expected to get paid. What if your account balance reaches zero when you’re paying your month-end dues? Do not fret.
The overdraft facility can help in this situation. The ability to overdraw current accounts is one of its key advantages. This indicates that you may temporarily overdraw your account (take out more money than is currently in it) to cover working capital requirements for a certain period of time. You may or may not be charged interest on the sum you overdraw, depending on the terms and conditions of the bank, your transaction history, and your relationship with the bank.
2) Have plenty of cheque leaves
Do you recall when you first created a savings account? Most likely, your bank issued you a chequebook for the entire year. When you ran out of cheque leaves, you had to go back and pay to get a new chequebook. For owners of current accounts, it functions differently.
As your startup would require to make frequent transactions through cheques, you receive an abundance of cheque leaves, which is one of the many advantages of current accounts. A certain number of free cheques are sent to current account holders each month. According to your bank’s conditions, you receive a brand new chequebook every month so you can conduct business without worrying about running out of cheques.
3) Freedom to transact without limits
Your company likely completes thousands of transactions every month, which will undoubtedly rise as it expands. Limits on the volume of transactions are impossible in this scenario.
The absence of transaction limits is one of the main advantages of current accounts. Two things cause this. One, there are no restrictions on the size of any transaction. Additionally, you can conduct as many transactions as you like in a month using the method of your choice, be it cash, Internet transfers, cheques, pay orders, or cash.
4) Boost your credit score
Early on, your business might not be able to obtain a loan, but current account plans give you a credit card in exchange for a fixed deposit. Your credit score may be improved as a result of upcoming loan applications. Additionally, current accounts offer an overdraft feature that enables withdrawals above the balance of your account. The overdraft is simply deducted from the subsequent deposit you make to the account.
5) Increasing your startup’s credibility
Establishing accurate estimates for your business is difficult when your financials are disorganised.
One of their many advantages is that current accounts make your financial affairs clear. In order to analyse your transactions, current accounts can aid by giving you a clear record of where your money has come from and gone, as well as by showing you how much it has grown each month. You may create a plan for your company’s future that is supported by accurate financial data by looking at the patterns your current account reveals and analysing them.
6) Gain access to credit
Financial institutions can be difficult to convince when it comes to making them part with their money to fund you. A current account can give you quite the boost there.
A current account records your transactions, including repayment of the previous debt, if any. It also shows the lender your financial standing – and the basis of your financial projections.
Additionally, several banks include forex capabilities alongside their current accounts designed specifically for startups, eliminating the need for a different account for foreign currency. You can hire an expert to help you navigate the legal requirements governing foreign trade or investment problems.
A current account is necessary for every business, regardless of size, to manage its daily transactions. Understanding the importance of maintaining a current account in the beginning is crucial for startup firms. Fret not, now you know all the benefits of having a current account for startups.
