As an entrepreneur, starting and managing a small business can be both an exciting and challenging experience. A key aspect of running a successful business is establishing a solid financial foundation, and that always begins with choosing the right small business financial partner. 

At Riverways, we’re dedicated to supporting small businesses in all the 27 counties we serve throughout Missouri. We've put together this essential guide to better help you understand what you need to know about small business banking and how to use its tools.

Choosing the Right Business Banking Partner

Selecting the right banking partner is crucial for the growth and success of your small business. Look for a financial institution that offers various services tailored to small businesses, competitive fees, and personalized customer support. Credit unions, like us, are often an excellent choice, as they prioritize member needs and typically offer better rates and lower fees than traditional banks.

A business checking account is also necessary to separate your personal and business finances. This partition makes managing your finances easier and simpler and protects your personal assets in case of any unforeseen legal issues. When opening a business checking account, you must consider minimum balance requirements, transaction limits, and monthly fees.

Financing and Building Credit

As your business grows, you may require additional funding to expand, purchase equipment, or hire more employees. You have various commercial lending options, including Small Business Administration (SBA) loans, business lines of credit, and term loans. We recommend familiarizing yourself with these options and their requirements to determine the best fit for your business. If you need guidance, our in-branch financial advisors are always happy to help.

Creating and sustaining a robust corporate credit record is crucial for obtaining funds and negotiating improved conditions with vendors. To develop business credit, consider acquiring a company credit card and making timely bill payments. It's recommended to consistently track your credit statements for precision and swiftly rectify any inconsistencies.

Merchant Services and Business Savings Accounts

Streamlining payment processing is important for providing a seamless customer experience and ensuring your business runs smoothly. You’ll need to gain access to merchant services that allow you to accept various payment methods, including credit and debit cards, mobile wallets, and electronic checks. Integrating these services into your small business banking plan improves cash flow management and minimizes transaction costs.

A business savings account is an excellent tool for setting aside funds for emergencies, future investments, or planned expenses. Consider setting up automatic transfers from your checking account to your savings account to help you reach your financial goals. 

Cash Flow Management

Effective cash flow management is essential for your small business’s success because it ensures both financial stability and liquidity. Some of the key strategies involve creating a cash flow forecast, optimizing accounts receivable, and managing accounts payable. When anticipating income and expenses, you can make better-informed decisions while also adapting to the changing business environments.

You can encourage timely customer payments by offering incentives, setting clear terms, and using an invoicing system. We recommend you avoid late fees and maintain supplier relationships by tracking and scheduling payments, negotiating more favorable terms, and using any early payment discounts. The separate business savings account we mentioned earlier can help cover unexpected expenses or provide a financial cushion during economic downturns.

Leverage digital banking tools like accounting and cash flow management software to automate processes, save time, and minimize errors. These tools offer valuable insights and reports for informed decision-making, streamlining overall cash flow management for your small business.

Using Digital Banking Services

In today's fast-paced world, having access to your accounts anytime, anywhere, is vital. With digital banking services, you can monitor account balances, transfer funds, pay bills, and even deposit checks using your smartphone.

This is important because effective cash management is crucial for your small business's success. Some of the services that help you monitor and control your cash flow include account reconciliation, wire transfers, and automated clearinghouse (ACH) transactions. By utilizing these services, you improve your financial efficiency and also minimize the risks associated with cash handling.

We’re Here to Help

Understanding the ins and outs of small business banking is crucial in your entrepreneurial journey. At Riverways, we’re committed to providing the support and resources you need to navigate the world of small business banking with ease and confidence.

Remember, the journey to success begins with having a solid financial foundation. Partnering with a credit union like ours ensures you have access to personalized service, competitive rates, and a wide range of financial products tailored to your small business needs.