As a bank customers, you must be clear about the message your bank statement conveys.
Most believes a bank account with huge balance may put them at an advantage when presented to organization requiring it.
Others believe huge balances in their account over a period indicates a business account that is well operated.
Still there are some with the misconception that only their savings should deposited in their bank account and after they must have taken care of business expenses and made payment to your supplier/s from cash sales.
Business bank account shows that you have a business banking relationship and can approach your bank as a business entity.
This article focus on business accounts and the messages the transactions on the account conveys.
Here are what your bank statement says about your business
A business bank account shows you are in business.
An account in a business name or registered company shows that you are not just as a trader.
Using a personal account for business may not be a bad idea if you are a starter or a petty trader but if you are planning to be big and want records of your business growth with you bank, you should register a business and open a business bank account.
You should also ensure all your business proceed passes through your business bank account.
Only with a business bank account, you can approach your bank for business finance and enjoy other business banking products.
A very busy bank account.
A business bank statement with regular inflows and outflows and little or no balance in the account shows that you are stretching your cash flow and may need to inject more fund to take full advantage of your market.
This may only be true if you are not cleaning out your bank account for reasons other than that of your business.
If you clean out your account for savings, capital projects, stocking of raw materials beyond what is needed for a production cycle or for other lifestyle financing other than your business, then this assumption may not be true for your business.
Huge balances in your business bank account.
Large amount of money in your bank statement or business account with regular inflows and outflows shows that you have a business that is very profitable, you are taking full advantage of your market and may need to expand.
Large balance in business accounts with no regular transactions may indicate a business that is waiting to take advantage of opportunities or that the company is no longer in business.
Occasional large lodgment and large outflow
This may indicate a company in real estate or businesses other than fast moving consumer goods (FMCG).
It may also indicate that the account is not your major bank account and that you house funds in the account to be used when needed.
Regular tranches inflow and large outflow
This is an indication that you are either a manufacturer or trader in Fast Moving Consumer Goods (FMCG).
Your bank statement shows that your customers pay you regularly, and that you make payments to your supplier/s for stocks raw material.
This is also applicable to the account of a trader who have regular inflows and large outflows to replace stocks.
Occasional/ Regular Large inflow and tranches outflow
Your bank statement may indicate a service business. Large inflows are for contract mobilization, while tranch outflows may indicates payment for inputs.
For service companies, large inflow may indicate payment for service rendered and tranches outflow may indicate payment to workers.