Banking

What is 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.