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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. Dive in!
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.
As a businessperson, you must maintain a current account and savings account separately to ensure segregation of your 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 you accurately record the business’s income and expenses. This will enable you to understand the business’s financial standing and help you plan your business finances accordingly. This will also help you generate projections for your business more efficiently.
On the other hand, if your business and personal finances are mixed up in one account, you will have messy financial records that you will undoubtedly have a hard time making sense of.
Financial institutions are big on verifying creditworthiness before they part with their money to fund you. And, having a current account under the circumstances 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 repayment of previous debt. Your current account will give the lender a clear picture of your financial position, and if all your records are in order, it will boost your chances of them giving you that loan you need.
Cash crunches are not uncommon when you’re running your business between periods of selling your product or service and receiving payments. And, this is where the ability to overdraw comes in handy.
One of the most popular features of current accounts, the overdraft facility lets you withdraw an amount greater than your account balance, for a short period of time. When more money flows into your account, the bank automatically takes the amount it let you 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 your bank.
Adds to business competence
Issuing cheques, demand drafts and pay orders in the name of your business adds that professional touch you need to boost your brand’s reputation. And – you guessed it – to do that, you need to have a current account for your business.
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 you can’t run business operations out of a savings account.
Current accounts have no limits 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 help 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!