When first starting up your business you will find it helpful to consult your bank’s business manager.
These managers specialise in giving personalised advice to small to medium-sized businesses and will help you tailor your business accounts to suit your particular needs.
They can set-up accounts to coordinate your banking needs and help you operate more efficiently. These may include:
Day-to-day transaction accounts
Cash or cheque management accounts
Tax management accounts
Merchant account facilities
It is a good idea to build up a relationship with your business bank manager, who will get to know how your business operates from the beginning. Furthermore, a good relationship can help if you later need to raise another loan or extend your credit facilities.
Setting up a business account
If you raise start-up finance through a bank, they will help you set-up the accounts necessary to handle all your business requirements.
However, if you have obtained money from another source you will need to set up dedicated business accounts and will have to provide your bank with the following details:
The full or registered name of your business
Your trading address, registered office and postal address
The number of people owning/controlling your business and holding signing powers
Their name, mailing address, contact number, position or title
Your Business’ ACN, ABN or ARBN.
As part of your business operation you will also need to consider how you wish to accept payment and set-up the associated facilities.
Accepting credit cards
These days it is becoming increasingly common to accept payment either by credit cards or via EFTPOS. Before you can do so you will need to set-up a merchant account.
This can be done through any of the major Australian banks and will allow you to accept payment by Bankcard, VISA and MasterCard.
If you manually process credit-card transactions the receipts should be banked daily with your other deposits. Banks accept all credit risk associated with these cards, so long as you follow their approval instructions.
These include verifying the card holders signature, checking the details against a list of cancelled cards and gaining any necessary authority if the amount is above a certain limit.
The bank will deduct a service fee on credit card transactions, which can range from two to five percent of the sales draft, and it will credit the balance to your account.
The commission charged by the bank is usually based on a percentage of your net credit card sales turnover. It is important to note that these commissions are negotiable.
If your business processes a large number of small transactions, accepting credit cards can eliminate a lot of your paperwork. Additionally, if customers can pay by credit card they are more inclined to spend impulsively.
If you wish to accept American Express and Diners Club you will have to set-up an additional merchant account with each concern. Pass these details on to your bank so it can process these transactions.
EFTPOS or real time transactions
Real-time transactions are those, such as EFTPOS, where processes take place immediately.
This means, for example, that funds are taken in real-time from a customer’s bank account and straight away deposited into your business bank account. Bank confirmation can be immediately provided.
There are many benefits to accepting real-time transactions, not least being there is no delay in crediting funds to your account.
This process also cuts down on a large amount of processing and paperwork, minimises your bad debts and has cash flow advantages.
What is more, facilities such as EFTPOS also encourage the average shopper to spend more, as they have immediate access to the funds in their bank accounts.
Accepting payments online
If you have a Web site associated with your business and wish to accept online payments you will need an Internet merchant account.
This is an extra facility allowing you to process credit card transactions on the Internet or over the phone. This is called a MOTO (Mail Order Telephone Order) and has a different set of rules. It can also be called a Card Not Present (CNP) transaction.
The main difference between a MOTO Agreement and an over-the-counter Merchant Agreement is with the first there is no physical signature during the transaction. This raises the issue of who accepts liability. With MOTO or CNP, in the case of fraud you, rather than the bank, are liable.
We suggest you talk to your bank manager and make sure you clearly understand your responsibilities, as well as the associated fees charged by the bank.