The Hidden Cost of Having Multiple Financial Providers
As a business, having multiple financial providers or banking institutions is sometimes unavoidable. At times, opening up a new account may be out of necessity rather than desire. When bills pile up, and you need another line of credit you may find yourself turning to another financial institution to help pay the overhead or suppliers for that month. On a much larger scale, If your business is considered global then opening up multiple accounts in different countries may also seem like the only solution to collecting foreign currency and paying foreign payrolls.
In other circumstances, opening up a new account may be to qualify for the latest and greatest deal offered by a bank that your business isn’t already a part of. Banks often lure you in with promises of “free” money when you open up a new account or other low-quality offers that seem irresistible at the time. As a business owner looking for solutions to your banking challenges, you should never fall victim to opening up more accounts or partnering with multiple finance providers.
Whatever the reason, having more than just your necessary financial provider can be detrimental in multiple ways for you and your business.
Here are some of the real hidden costs of having multiple financial providers:
Fees, Fees, and More Fees
A hidden cost that isn't so hidden when it comes to having multiple financial providers is the fees that come with them. Just one account or provider alone will have you rolling in the negatives if you aren't attentive to your financial situation from the start. Most banks will be upfront about their yearly fees when you sign up but there are a few other fees that they may fail to mention when you go to sign on the dotted line:
Monthly Maintenance Fee
Monthly fees can range from a single-digit amount to a double-digit amount. These fees can typically get waived by opening up multiple accounts within the same financial institution, but you need to be able to satisfy their minimum monetary requirements. Even if this is initially feasible, that is money that can be used elsewhere for your business. In the long run, keeping up with the minimums to keep accounts open will end up setting your business back further than you may anticipate.
Excessive Transaction Fee
Sometimes, emergencies happen where you may need to pull an excessive amount of money out of your savings account. Doing so can set you back financially as most banks have excessive transaction fees.
With money constantly circulating in and out of your account, keeping track of what is and isn't in there can be a hard task all on its own. overdrawing from your bank account is an easy accident that can cost you big time in the long run.
Insufficient Fund Fee
Following that nasty overdraft fee comes an insufficient fund fee. If you accidentally forget to place overdraft protection on your account, you can then be penalized for overdrawing from your account and then for not having enough money in your account. Now imagine if you did this with multiple accounts. Chances are, your business would have a hard time recovering from all the fees you're likely to acquire from having multiple accounts.
Bank Transfer Fee
If you wish to transfer money between your multiple business accounts or pay off the debts with your suppliers, the fastest way to do so is through a bank transfer. And just like with anything else, your bank is likely to charge you a fee every time. Over time, these fees add up and outweigh the ease that comes from using the bank transfer option.
It's clear that having multiple accounts and acquiring all these extra fees can add up rather quickly. These fees can easily be avoided by not opening up multiple accounts with multiple finance providers. Instead, find companies like Fyorin whereby with one solution and one commercial model, you can seamlessly bank with multiple banks across a curated network of financial institutions, as if you are banking with one while being offered a tailored banking experience.
As briefly mentioned previously, most banks require a minimum amount of money to open a new account. Once the account is opened and all fees (that you’ve been made aware of) are paid for, you must then leave a certain amount of money in the account for your business to be able to use it. Remove too much money and you will get fines and banned from accessing your account until dues are paid and the balance is restored. This is not only incredibly annoying to deal with but not practical from a business point of view. As a business, you should be able to access your account no matter how much money is in it. Being penalized for using your own money is not something you should ever have to worry about, especially across multiple financial providers.
Managing Multiple Accounts
Keeping track of multiple accounts takes time and resources that you and your business may not want to invest in. After all, running a business is hard enough as is especially if it is global. Between all the other responsibilities that come with running a successful business, keeping track of what is and isn't in your account should not be an added item on your to-do list. Things become increasingly harder the more accounts there are to monitor. An individual could be hired to manage it all but that is an added individual that needs to be added to the payroll. Rather than wasting the time and money that it would require to keep track of multiple financial providers and accounts, consider opening an account that can do it all.
Credit Score Impacts
It's true that opening up multiple savings and spending accounts won't impact your credit score. However, if you are opening up a new line of credit then your score will tank faster than you may imagine. With every credit account comes to a credit check and with every credit check comes a drastic drop in points. This has drastic negative consequences that you may not be aware of immediately. However, next time you try and open a line of credit or apply for a new loan to expand your business you may be unpleasantly surprised to hear that you cant. This is because having multiple financial providers negatively impacts your credit and ultimately your chances of expanding your business.
Time and Resources
Managing multiple accounts, keeping an eye on minimums, ensuring that all fees are paid on time, and knowing which account to pay them on takes time and resources. The time and resources that you and your business put into doing these added tasks due to having multiple financial providers can add up quickly and take away from your revenue. Rather than paying someone to do this extra work or investing the time to do it yourself, consider partnering with companies that do the work for you under one account.
Companies like Fyorin allow you to have it all under one platform. They offer multi-currency accounts and other financial products, such as corporate virtual cards and more across a curated network of financial institutions, tailored for your needs, under one log-in. This means that you never have to figure out which account works best for certain transactions. Solutions like Fyorin are great for global businesses where it allows financial teams to focus more on their core business and removes the banking complexity that comes along when operating cross-border. Close those fee-riddled accounts and partner with Fyorin today!