At first glance this tip may seem like stating the obvious but you would be surprised at just how many business owners either don’t use online banking or just can’t be bothered with the long winded log-in security procedures. Also, many online banking users don’t use all the features available to them like BACS payments etc.
All major Irish banks offer online business banking to their customers, at a price. It costs on average €200 per annum but for the following reasons I feel its worth it.
1. Reduce / eliminate the number of cheques you write.
If you post a cheque to a supplier it costs you 55c for the stamp, 50c government stamp duty on the cheque and your bank will most likely charge you 30-50c for the privilage, thats up to €1.55 per cheque! With online banking you can pay almost all your bills online with the only cost being your banks charge. It also is much less time consuming and you don’t have to worry about your cheque bouncing as the payment leaves your account instantly (with a cheque it depends on when your supplier cashes it).
2. Instant access to your bank transactions.
This is self explanatory really. Waiting until the end of the month to receive a bank statement is very frustrating and when a lot of businesses are running overdrafts its impossible to manage without a daily look at your bank balance.
3. Bank statements make more sense.
When you make a payment online you get to choose a narrative that will appear in your bank statement. You can tell what each payment was for at a glance and there is no more need to root out the cheque stubs to see what cheque # 500326 was for.
4. Upload BACS files.
If you want to pay multiple items at once you can, this is particularly useful for paying wages if you have a few employees. Almost all payroll packages produce an electronic file for uploading to your online banking system. You just need to input your employees bank details on your payroll software, run your month end payroll figures and export the BACS file. Next, login to your online banking system and upload this file and choose a date to pay. You will see a single line item on your bank statements e.g. June Wages and each employee’s account will automatically be credited with his/her wages. This also works for paying suppliers at month end if your accounting system is compatible.
5. Get paid faster.
I believe all sales invoices should contain the vendor’s bank details so that customers can make payments to you online.
6. Open deposit account and deposit surplus funds.
If you have surplus funds in your business current account you might want to consider opening a deposit account to earn some interest, online banking helps you manage this and make regular transfers between your current and savings accounts. Some clients of mine also open a second account for their VAT liability so that they are not short of funds when the VAT return is due. You simply open a second current/ deposit account and at the end of each week transfer about 15-20% of your cash receipts to this “VAT Account” so that you will have funds to pay the VAT man when the return is due. This works really well for businesses who have high VAT bills like retail, restaurants and hotels.
7. Reduce your accountancy fees.
Reduce your accountancy fees by providing your accountant with an Excel file of all your bank transactions. This will reduce the time he/she spends working on your accounts and should result in savings of at least 10-15%. A .csv file can easily be downloaded from your online banking system but be sure to do it regularly as most systems only allow you export transactions for the past 6 months.
8. Upload bank statements to your accounting system.
Online accounting systems like xero.com allow for the uploading of bank statements from your online banking system. This saves vast amounts of time when you/your bookkeeper is doing the bank reconciliation at the end of the month and it also greatly reduces the chance of errors.
Online banking is not just a way to check your account balance more often, it can do so much more and will save you time and money. Your bank account is the heart of you business finances so its vital that you are using it to its full potential.
What you need
Online Business Banking account with a major Irish bank (AIB, BOI, Ulster Bank or PTSB)
Computer with internet access
Where to get it
Just ask customer services at your current bank.