These days, the very survival of small businesses can depend on things as minor as monthly fees they pay to their banking institutions. As costs for everything from taxes to wages to overhead expenses always seem to be increasing- small business owners are looking for ways to reduce costs across the board- and we have put together some very informative and educational tips that can help to cut down on costs- and keep as much money in your pocket as possible. Here are five tips covering the most common scenarios that small business owners encounter on a daily basis:
- Keep in contact with your account rep and tailor your monthly banking plan to your transaction volume needs. Some businesses use their accounts regularly, some only semi-regularly. It is important to educate yourself and be aware of all products offered by your financial institution- and their costs. You could be saving a lot of money in unnecessary monthly fees by switching to a package deal; or depending on the volume of transactions your business does in a month- to a pay-as-you-go plan. Keeping in touch with your account representative at your bank and seeking their advice to lower your costs- plus asking them to notify you of any changes in plans or pricing- can save you a lot of headaches (and money) at the end of the day.
- Self-service is the way to go. Compared to the hassle and expense of traveling to the bank- paying bills from the convenience of your computer using free bill payment tools provided by your financial institution (plus also conducting Canada Revenue Agency payroll remittances yourself) can really decrease those monthly fees that tend to add up!
- Make lump-sum payments wherever possible. As banks charge fees for each and every transaction you conduct, this can add up to an eye-popping amount, especially for regular and routine transactions. Cut down on your transaction volume by paying for expenses- especially when drawing a salary for yourself or for other employees- so that you are paying it out in- for example- one or two lump sums per month; rather than once a week.
- Watch out for high-interest loans with punishing interest rates. Borrowing money to grow and sustain your business is sometimes inevitable; but many banks offer seemingly innocuous lending products (with lots of fine print) that carry punishing interest rates; especially if you are late on making payments. Borrow as seldom as you have to- and always be sure you have enough in your account to cover loan payments- as a myriad of late fees, NSF fees, and interest payments can add up very quickly- making your life miserable.
- Understand all aspects of your payment costs. Paying expenses digitally rather than by cheque can be more cost-effective. Beware of hidden fees - even costs like parking and transportation should be considered! For a business that does a high volume of monthly expense payments - the savings by switching to digital could be substantial.