A current account is an essential banking requirement for all businesses. It allows them the flexibility to carry out a large number of transactions while offering services built specifically for business needs.
We’ve put together a short guide to the features of current accounts to help you understand how they help streamline financial operations for your business.
Features of current accounts
Current accounts are financial products built specifically for businesses and are different from savings accounts in more ways than one. Having a current account is not only beneficial for your business from the taxation and legal perspectives, but also helps you maintain clean, comprehensible financial records.
Here are the top five features of current accounts:
Distinguishes business dealings from personal financial dealings
Tempting as it may sound to have one account for all your business and personal needs, it is a sure-shot recipe for financial disaster.
Having business and personal finances mixed up in one account results in messy financial records that is difficult to make sense of.
Business founders must maintain a current account and savings account separately to ensure segregation of personal finances from those of the business. Sole proprietors especially must follow this while carrying out business-related transactions.
Opening a separate current account will help founders accurately record their business’s income and expenses. This enables them to understand their business’s financial standing and help plan business finances accordingly. It also helps generate projections for the business more efficiently.
Financial institutions are big on verifying creditworthiness before they part with their money, and having a current account can prove to be more helpful than you’d think.
One of the primary features of current accounts is that they provide you with an accurate record of your transactions, especially when it comes to the repayment of previous debt. A current account gives the lender a clear picture of the business’s financial position, and if all the records are in order, it boosts the business’s chances of getting that loan!
Cash crunches are not uncommon between periods of selling products or services and receiving payments. This is where the ability to overdraw comes in handy.
One of the most popular features of current accounts, the overdraft facility lets founders withdraw an amount greater than the account balance for a short period of time. When more money flows into the current account, the bank automatically takes the amount it let the account holder overdraw earlier.
The icing on the cake? If you have a great relationship with your bank and they find your financials spotless, they may not even charge you interest on your overdraft! This is, however, subject to the terms and conditions of the bank.
Adds to business competence
Issuing cheques, demand drafts, and pay orders in the business’s name adds that professional touch needed to boost a brand’s reputation. Having a current account in the name of the business allows for this!
No limit on transactions
Unlike the transactions we make out of savings accounts, which banks limit to inculcate the habit of saving, businesses make hundreds of transactions every day. This is the fundamental reason why business operations cannot be run out of a savings account.
Current accounts, on the other hand, have no limit on the number of times you can transact daily. This is one of the basic features of current accounts that distinguish them from other types of demand deposits.
Current accounts make transferring funds and receiving money through various means (online, or via cheques, demand drafts, or pay orders) hassle-free and flexible. Account-holders can also make multi-city transfers and instant fund transfers via RTGS and NEFT.
Many financial institutions also offer a zero-balance current account, which allows you to transact without maintaining a monthly average balance (MAB).
Trivia: Banks do not pay interest on the credit balance of current accounts, given that the amounts and volume of transactions are high.
RazorpayX supercharged Current Account: the end-to-end banking solution you need
Built for growing businesses, the RazorpayX powered Current Account, backed by leading private banks, is a comprehensive business banking hub that streamlines your banking operations.
Apart from giving you the basic features of current accounts, your RazorpayX powered Current Account allows you to
- Add beneficiaries and transact instantly, without a cooling period
- Gain detailed insights into your finances from a powerful dashboard
- Automate payouts with powerful APIs
- Set up approval workflows, so you never have to deal with OTPs
- Make tax payments from one dashboard – without having to hop portals
- Get full access to the RazorpayX product suite: Payouts, Vendor Payments, and Payroll
… all with 500 free payouts every month!
The icing on the cake? You can apply for a RazorpayX powered Current Account in minutes.
Ready to supercharge your finances?
Frequently Asked Questions
What is Monthly Average Balance (MAB) for a current account?
Monthly Average Balance (MAB) refers to an account’s average closing balance on every day of the month. It is sometimes also referred to as Minimum Average Balance and is given by: MAB = sum of the closing balances for every day of the month/ number of days in the month.
How can I apply for a RazorpayX powered current account?
Here’s how you can apply for a RazorpayX powered Current Account in 4 simple steps:
Step 1: Sign up here or log into the RazorpayX Dashboard
Step 2: Select ‘Apply for a Current Account’ and hit the ‘Get started’ button
Step 3: Enter basic details about your business – your business type (proprietorship, partnership, or company), and your business category (e-commerce, ed-tech, and the like).
Step 4: Input the pin code of your registered business address, and click on ‘Submit’
And that’s it. The RazorpayX Team will get in touch with you and have your account up and running in no time!