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Last Updated: Wednesday, 8 June, 2005, 22:25 GMT 23:25 UK
How to get the best banking deal
Money
It is vital to find a bank account that will best look after your money
With all the banks offering different accounts for small businesses, how do you choose the one that would be best for your firm?

Russell Lawson, from the Federation of Small Businesses Wales, looks at some of the deals available.

QUESTION
Ted Newton, England
What is the cheapest method of banking for a small business

whose turnover is mainly cash?

Most of the usual banks have now introduced a premium rate for cash banking as opposed to cheques or card transactions.

For obvious reasons, wholesale suppliers who deliver won't accept cash.

So how do I get cash into my bank account?

I have been told that the Post Office handling of cash is cheapest, involving transfers to the main bank account later.

ANSWER
Russell Lawson, Federation of Small Businesses Wales
The point here is that not all banks are the same.

With a small business it is probably more prudent to look at charges as opposed to interest rates.

Whatever your balance is in your bank, small business accounts will always attract charges for one reason or another.

It is also wise to remember that great interest rates usually mean high penalty interest on overdrafts.

So when you have a cash business, look around for the best deal.

Some will offer you free banking for the first two years, while others will charge you nothing for the first 3,000 you deposit every month, and nothing for the first 100 cheques you cash in a month (which is not a bad amount for a small business!).

You can use such offers as negotiating tools: banks are businesses like everyone else, and you should not be afraid of booking to see your bank manager and negotiating better terms, citing what other banks offer and getting them to match it.

Or you could do what your bank manager wouldn't want you to do and open a standard cheque book account (current account), which would simply create a facility where you can pay in cash and cheques and withdraw money.

However, if you're happy with your Post Office arrangement because it is more convenient, then carry on doing this.


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