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Small business tax concessions and mortgage offset account
Banking

Small business tax concessions and mortgage offset account

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Banking

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How to Check and Manage Your Business Credit File
Banking

How to Check and Manage Your Business Credit File

For years now small business owners have said one of, if not, the biggest challenge they face has...

Banking

Business banking (also known as commercial banking) refers to a company’s financial dealings with the institutions which maintain their credit, savings and checking accounts. These institutions typically also provide business loans and other financial services essential to the proper management of a company. Business banking is typically done by institutions who also offer retail and investment banking, meaning that many business owners hold their company accounts and personal accounts with the same bank.

What do business banks do?

In addition to managing savings and checking accounts, business banks typically offer credit, financing and cash management services to assist businesses in managing their financial affairs effectively.

Banks often offer businesses lines of credit, which they can use to pay suppliers while waiting for their invoices to be paid. This takes pressure off the business and prevents them from becoming insolvent when cashflow is low.

Bank financing is one of the main ways that businesses acquire capital. Banks can provide financing for a range of situations, including for business expansion, for new acquisitions, for new equipment or to meet rising expenses. Bank financing typically takes the form of fixed term loans (short or long term) or asset-based loans. In some industries there are specialised banks which service the industry’s particular equipment or assets.

Cash Management (also known as treasury management) helps businesses manage their cashflow. This includes their accounts (receivable and payable) and their cash on hand. These services rely on digital tools and refined cash management processes which result in lower costs and higher liquidity for the business.

In addition to these services, most banks these days offer electronic payment processing to assist in the speedy transfer of money into and out of the business. They also offer systems to move money around between different accounts (such as from a checking account to a high-interest savings account) and most offer automation options for these processes. This allows businesses to maximise the returns on their cash.

The same digital banking tools and interfaces that are used by individuals for online banking are available to businesses with all major banks, and typically offer specialised business functionality to assist in the proper management of business finances.

What are the major commercial banks in Australia?

The Australian banking sector is dominated by four major banks, who offer a huge range of financial services including both personal and business banking. The four major banks are:

  • National Australia Bank (NAB)
  • Commonwealth Bank (CBA)
  • Australia and New Zealand Banking Group (ANZ)
  • Westpac (WBC)

The federal government has maintained the status of these four banks, who between them control over 82 percent of all loans in Australia. For this reason, most businesses choose to conduct their business banking through one of these institutions or their subsidiaries, as they offer the most sophisticated tools and products and have the most access to capital. These banks are highly skilled at financial assessments and are able to provide loans to businesses based on financial forecasts and statements, making it easy for businesses to grow and acquire new assets.