Some time back, about 15-20 years ago, some folks, especially traders in the informal sector and other business people didn’t have anything to do with a bank. Cocoa farmers would just go to the bank because that is where they were paid. Farmers could spend days before they get their monies and so once it gets to their turn they take all and walk away. There were so many reasons why people did not patronize the services of banks;
1. There were few banks
2. The banks didn’t really do much to attract customers because there was very little competition
3. The banks gave very little attention to micro, small and medium enterprises and it was very frustrating for customers to make withdrawals because of long waiting times at the banking halls back then. The banks also didn’t have many products and services tailored towards the needs of clients.
4. People preffered handling cash as opposed to recent financial education on the need to go cashless and still be able to transact business.
Small business owners (informal sector) mainly didn’t show much interest in dealing with the financial institutions. People preferred keeping their monies in their lockers, under pillows, with a trusted partner and any other place apart from the financial institutions.
Changes in the way we do business and modern advancements in technology have made it expedient for all businesses to maintain a relationship with a bank. There are many banks in existence now and businesses have a choice as to which institution to bank with. Banks have now been categorized into different bands serving different needs. Some banks are big and don’t serve the needs of small businesses but other big banks have specialized departments and desk which caters for the needs of small businesses.
• Universal banks
• Savings and loans institutions
• Rural banks
• Microfinance institutions
• Cooperatives associations
To have a fruitful relationship with your bank, look for a bank that best serves your needs and do business with them. Not every bank would be ideal in providing service that will be the best for you. Banks in themselves have interests, specialties and sectors or industries they do business with. A bank like HFC provides home finance packages for clients; in recent times, some savings and loans companies give loans to farmers to assist them in their agricultural activities; some have their core mandate as being small business friendly (UT Bank) and other banks are more interested in customers in the middle class and above, or businesses with medium to high volumes of turnover.
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In all of these, it is the duty of the business owner or manager to decide, looking at what the business has set out to do, to figure out which financial institution will best serve their needs. It will serve the business a great deal if the owner/manager spend some time profiling these financial institutions and asking for expert views and opinions on the best bank for you to do business with.
In selecting a bank what do you look for?
1. Look at your business needs, e.g. do I have payments by cash, cheques, mobile money,
2. How do you also pay people? With the advent of fintech, some banks are now merging
mobile money accounts to your bank accounts. That will serve the small business owner a great deal to monitor both at the same time.
3. If you collect cash, are you safe with it? There are savings and loans companies who visit businesses for cash collection purposes. This saves time and money journeying to their office to make those same deposits.
4. If you travel out do you have to carry plenty cash? You might want to consider a financial institution with a good nationwide coverage to leverage on transactions when travelling for business. This reduces incidences of carrying of cash and eases the risks of cash lost in transit.
5. How often do you need financial support to meet your obligations? You should not do business with a financial institution which always refuses you financial assistance, when in need of support for supplies and meeting operational expenses. You can do a simple background check and ask around on the financial standing of the particular institution you want to do business with.
6. How much am I prepared to pay for banking services? Some banks charges are borne on every transaction made; as a small business you would not want to be paying too much on bank charges. The banks relationship officer will explain things further if you ask about their charges.
7. Do I even have time to bank? You will be better off doing business with a bank which provides mobile banking. It saves you time and money.
8. Do you usually get spare cash that can sit?
Once some of these questions are answered you know that you have something to hold on to even before you venture to work with a bank. It may even be necessary to work with more than one bank but don’t do more than three. That is diversification which can be costly.
It’s not safe to keep the money in a safe in the office or under a pillow, aside it losing value it can be stolen. To prevent employee theft and loss of the value of the money save it with a financial institution.
Choose your bank don’t let your bank choose you.
Credit: Ghana Talks Business