Welcome to our first edition in our series of the CFO Tech Stack!
For the next few articles, we are going to take you through the tools that you NEED to have in your organization…whether it’s to save time, reduce errors, or look cool in front of your friends and family 😎.
Today, we’re going to talk all about business banking and credit cards under the Accounting Software.
Let’s begin!
Before you can do anything in your business…you’ll need a bank.
Sure, you can always pay for things on your personal credit card, but you’ll then have to
deal with all the headache of process expense reimbursements 🤕.
Choosing a bank is also an exciting task as that makes your business “legit”!
While every institution varies in terms of what they need in order for you to open a bank
account, you generally will need:
1. Your Articles of Incorporation (or Certificate of Incorporation). This is proof that
you formed a business.
2. Your Employer Identification Number (EIN).
3. Various forms of identification.
Most banks require you to go into a branch to open an account, but nowadays more and
more banks are allowing you to do so entirely virtually, and some will allow you to open an
account in less than an hour.
Here are the key things to look out for when choosing a bank:
1. Integrations
Many regional banks may seem great to work with because they are a part of your home
town…but they end up causing a lot of issues when you try to connect your bank feed to
various platforms.
The most common integration to set up is one between your accounting software and
bank account, so that all of your transactions will automatically sync without the need for
manual uploading.
Just this one task alone will save you a ton of time each month.
2. Service offerings
Your bank often times won’t be just a place that you hold your cash…
it will also be a place where you apply for a line of credit, put money in a high yield
savings account, invest in a money market account, process ACH / Wires, and much
more.
You may not have this need right when you open your bank account, but it’s a wise move
to think ahead for when your business grows, and your needs expand. Changing banks is
not a fun task!
3. Fees
We’re believers that most activities with your bank should be free.
Nowadays, there are so many options to choose from, there should be little reason why
you would need to pay an annual fee for your account….
Another common fee is for payments, whether that be domestic or international payments,
or ACH vs wire payments.
While it may not be common to get all of these services for free, it should ideally not cost
you a fortune each month
4. Level of Support
OK…this is a really big one.
You do NOT want to wait on hold every time you need to get in touch with someone at
your bank - odds are you are calling because of an issue, and banking issues are not fun.
Instead, look for a bank where you can establish a relationship with someone directly at
the bank who you can email or call.
Odds are, the bulk of your spending won’t be directly via your bank account.
Instead, it’s common to use credit cards to rack up points, and pay net 30.
There are many options for credit cards, with the most common options to be to get one
from your bank, or via American Express.
But just like there are many options for physical credit cards, there are many options for
virtual credit cards.
And if you haven’t heard of a virtual credit card…oh boy, we are excited to fill you in on
the magic.
With virtual credit cards, you can:
1. Create and destroy cards in a matter of seconds
This is really helpful, as you won’t have to wait in the mail for a new card to arrive, and
instead you can start using your card right away.
2. Assign limits for employees
Remember our comment earlier about how painful expense reimbursements can be?
That’s the beauty of virtual credit cards…there’s no need to reimburse anyone when they
use a company card 😃
Even better, you can assign a specific limit for how much an employee can spend over the
lifetime of the card, or on a monthly basis…
You can also assign specific vendors to the card, ensuring that employees only spend on
specific approved items
The way virtual cards work is that they typically either apply a limit based on a % of your
bank account, or instead act as a debit card where the funds are deducted directly from
your bank account.
OK…so you know what to look out for when choosing a bank…and you know how to find
the best credit card. Which option should you go for?
Well…we can’t tell you who to choose for each, and that will depend a lot on your
personal preference, and business, but we can suggest a few good options!
Traditional Providers
The benefit of traditional providers is that they have billions and billions in funding,
allowing you to sleep more comfortably knowing that your money is in good hands.
The most common banking & credit card providers that we see are:
But nowadays, many fintech platforms have come into the mix, allowing you to avoid a lot of red tape involved in working with a traditional provider. Here are our favorite:
Choosing the right bank and credit card may seem like a small task, but it can affect a lot
of things in your Finance & Accounting function.
If you haven’t already set up a bank or credit card, take advantage of one of the options
mentioned in this email and set yourself up for success from day one.
If you are thinking of switching banks, recognize that while it’s doable, it will most likely
require a lot of extra work and effort, as migrations can be cumbersome.
What is your favorite bank & credit card?