5 Key Factors to Consider When Choosing Your Business Bank Account

As an entrepreneur, you’re taking an idea, a dream, and working to bring it to life, and that is commendable in itself. But to transform this vision into a thriving business, you need a strong financial foundation – and that starts with choosing the right bank account for your company.

In this article, we explore five key considerations when opening a business bank account in Singapore, and how CIMB SME Account and BusinessGo Account can be the perfect companions in the long run. 

Whether you are in the nascent stages of launching a startup or are an established business looking to optimise your banking arrangements, this guide aims to provide you with the information necessary to make a well-informed and strategic decision.

1. Bank’s reputation

Choosing a bank with a solid track record offers peace of mind. Over time, these banks have demonstrated their dedication to providing consistent service to various businesses, both big and small.

Business banking, due to its intricate nature, often requires a more comprehensive support system. Banks that have built a good standing likely possess the experience to address customer inquiries efficiently and professionally. Such prompt service can be invaluable for businesses aiming to tackle financial matters without hindrance. 

Furthermore, banks that have built a respectable presence often strive to keep up with the evolving commercial landscape. They remain attuned to the changing needs from customers and the business sector, innovating their offerings accordingly. With their experience, they might also provide added benefits, like competitive interest rates and reasonable fee structures, that cater to the demands of modern commerce.

2. Interest-bearing capacity

An interest-bearing business bank account is more than a repository for your company's earnings; it’s an opportunity for your funds to grow. With such an account, businesses are rewarded with interests back on their balance, enabling their money to work for them.

Over time, this interest can accumulate into a substantial sum, serving as an additional revenue stream that can be reinvested in the company or act as a financial buffer during challenging periods.

However, it is vital to balance the benefits of interest earnings against any associated fees and account requirements. For example, an account with high interest rates but stringent conditions or high fees might negate the advantages. Understanding these complexities, CIMB has curated an offering that not only attracts but sustains. 

CIMB is currently offering a special promo for the BusinessGo Account: Enjoy 2.88% per annum interest on your balances until January 2024. Post-promotion, your BusinessGo Account will retain a robust base interest rate of up to 2%, ensuring your finances continue to grow.

3. Fees

Common fees associated with a business bank account can vary, but they are a critical aspect to consider when choosing where to manage your money. Given the variations in fees among banks, the following list will serve as a valuable tool to discern which bank offers the best value for your operations. For instance: 

• Monthly fee: This is a standard charge that banks impose on your account every month, irrespective of your usage level.

• Fall-below fee: If your balance dips below a stipulated minimum level set by the bank, you might incur this fee.

• Telegraphic Transfer (TT) fee: For businesses involved in international trade or operations, this fee, charged for transmitting money between banks across borders, is especially crucial.

• Fast And Secure Transfers (FAST): Ensure you're aware of any charges associated with real-time intra-country bank transfers.

• PAYNOW: This fee pertains to instant transfers using mobile numbers or unique identification numbers within the same country.

• General Interbank Recurring Order (GIRO): A charge for setting up or making regular, automated bill payments to service providers.  

While these charges might appear minimal on a month-to-month basis, they can add up quickly and divert funds that could have been better used to invest back into the business.

Bonus tip!

Fortunately, there are strategies to sidestep these costs. Start by thoroughly reviewing and comparing the fee structures of various banks before settling on an account. Opt for accounts with low or no monthly fees and realistic minimum balance requirements.

To support businesses, the CIMB SME Account offers no monthly fees for 12 months and enhances its appeal with the “no fall-below fee” feature. This means you can use the funds in your account anytime without worrying about dipping below a certain balance and incurring a penalty. This flexibility is a considerable advantage, especially for businesses with fluctuating cash flows, as it enables you to handle your finances without the stress of additional fees.

Alternatively, do your due diligence to maintain the minimum balance to avoid unnecessary charges. This might involve careful cash flow management to ensure that account balances stay above the bank's specified threshold.

4. Transaction and withdrawal limits

Transaction limits can also apply to various types of transactions, including FAST, GIRO, Payroll processing, and TT. Each of these transaction types is subject to different fees and limits, which can differ from one bank to another. For instance, there might be a cap on the amount that can be sent via FAST in a single day, or fees associated with sending multiple GIRO payments.

For businesses with high transaction volumes, these limits and fees can have a significant impact. If your business regularly sends large payments, being constrained by transaction limits could slow down your operations, delay payments to suppliers, or disrupt your cash flow management. This gradual accumulation of costs can silently drain your profit margins, making it a crucial consideration.

Let's take a practical look at the cost implications for a company handling 100 FAST transactions and 50 TT transactions every month. Referring to the table below, you can compare the offers from Bank A against the two CIMB business account options.

If the company banks with Bank A, the initial 50 FAST transactions will come free of charge, but they'd pay $0.50 for each of the additional 50 FAST transactions and $30 for each of the 50 TTs, amounting to $1,525 in total fees alone each month.

CIMB SME Account offers straight savings on FAST and TTs

• All FAST transaction are free
• S$15x50= S$750 for the 50 TT
• In total: S$750
• A straight saving of S$775 when compared to Bank A

Choosing CIMB's BusinessGo account offers similar advantages. 

• All FAST transaction are free
• All TTs are free until January 2024 for new customers
• This leads to a monthly saving of S$1,525 in comparison to Bank A

In both scenarios, CIMB emerges as a cost-effective solution, translating to tangible financial benefits for businesses with such transaction patterns.

5. Additional benefits

With the above considered, any extra benefits can be the final deciding factor when zeroing in on your choice of business bank account. These perks can enhance your business operations, stretch your financial resources further, and offer unique solutions tailored to your company’s needs.

Take a look at the following examples provided by CIMB:

SGD-MYR exchange rate

For businesses that operate across the Singapore-Malaysia corridor, foreign exchange rates can significantly impact the bottom line. CIMB offers a guarantee of the best exchange rates for SGD to MYR transactions. This feature is not just a cost-saving measure; it brings predictability and stability to your international transactions, allowing you to plan your finances more effectively.

Beyond banking

CIMB goes beyond the traditional scope of banking by providing businesses with value-added services in accounting, taxation, financial reporting, digital consultancy, and more. These offerings allow business owners to access a network of industry experts and consultants through CIMB’s partnerships. Find out more about our Beyond Banking offerings!

Open your business bank account with CIMB

From considering the reputation of the bank to evaluating the fees, interest rates, transaction limits, and additional benefits on offer, each aspect can make a substantial difference to your company’s financial health.

If you're in pursuit of a banking partner who understands your journey and is committed to walking it with you, get started with CIMB today. We invite you to explore how our business bank accounts can become integral tools in your company’s success story in Singapore. Apply online to open your business bank account today.