"Be Transparent" for enterprises

Which are the main criteria when choosing a bank?

Stability

You can evaluate the reliability of a bank by various parameters, such as shareholders, market presence, and financial performance which are provided in the yearly reports. The bank branch network, the number of clients, the amounts of deposits and credits are also important factors to be considered when choosing a bank. 

Transparency

Whenever you see an advertisement of a bank, it is important to see what is behind the conditions it describes. A responsible bank always informs its clients about the full prices of its services and also provides any important accompanying information about the product.

Speed

Time is money!  You should be always considering this fact so you do not spend your time in futile actions and long waiting for the decision for your credit. The speed in provision of services indicates professionalism and speaks for the quality of the work processes in a bank.

Professionalism and quality

The competent bank employee always listens to you and is capable to answer any question of yours so they can choose the right product, especially for you. You can judge for the quality of service by how you feel at the bank.

Understandable banking products

The wide variety of banking services offered is often a way to attract customer’s attention. The most important factor when choosing a specific bank product is that you understand its specifics and main advantages compared to other similar products on the market.

Price

Traditionally, the price/quality ratio is an important factor when choosing a bank. Be careful with implausible low interest rates on a loan or considerably high interest rate on savings accounts. As a rule of thumb, this means ‘’hidden’’ costs, fees, penalty interest rates, additional services and supplementary products. Make sure you know how much exactly a given service will cost you.

With your current account you will be able to make: 

Regular payments

The main advantage of this account is that it gives you the opportunity to pay your commercial partners without carrying cash. Through the current account you can quickly pay amounts on invoices of your suppliers that are distant from your office or shop, even abroad. On your current account you can also receive funds from clients in the country and abroad.  Many banks offer their customers the possibility to use their company account from different branches of the bank which is an additional convenience. It is good to check if your bank offers this service.

Most banks offer various ways to use your current account without visiting a branch. 

Internet banking

With this service you can check the balance of your accounts or make payments remotely from home or from your office.

Phone banking

Through it you can check the balance of your accounts on the phone or receive information about various banking products. In some banks, transfers can be also made through phone banking.

SMS messages

With this service you receive SMS on your mobile phone whenever there are incoming or outgoing transfers on your account.

In some banks this is free of charge, in others – there is a flat fee and in yet another - a monthly fee applies. Check the price of the transfers if they are made through Internet or Phone Banking.

Monthly payments

Since some liabilities are paid monthly – leasing rent, security, Internet etc., many banks offer the service of recurring monthly payments. With this service the bank undertakes to make the transfers you indicate while you do not need to fill in documents or visit branches. Many banks offer the service for monthly payments of utility bills of your company.

Pay your employees without wasting time

Often paying the employees takes considerable time of your accountants and cashiers. That is why many banks offer the Payroll service. With it the bank automatically transfers makes transfer of the salaries from your company account to the accounts of your employees with the need for you to carry cash and lose time for individual payments.

This service is also an advantage for your employees – this provides them with easier access to the loans offered by the bank. Usually the employees get a debit card allowing withdraws at ATMs, payments in shops or payment of utility bills etc.

Fees related to the ‘’Payroll’’ service

Most banks do not deduct a fee for transfer of salaries or if they do, it is a very small one. It is important that you check the fees that your employees will pay when for issuance and usage of their debit cards.

Usage of debit card

Some banks offer an option for a supplementary debit card to the current account of your company, allowing you to withdraw money from every ATM in the country or pay in shops, and gas stations without carrying cash. It is important to know that this card can be used for company purchases only so that your accountant can easily book afterward the expense.

Usually people relate deposits to personal savings. However, banks offer deposits to companies as well. If you have funds which you will not need for certain period, you can deposit them or transfer them to a deposit account where the interest is usually higher than those on a current account. Thus the money will be a source of additional income in the form of interest. 

How to allocate the company funds?

The financial situation of the company, applying for a loan is one of the key factors for the bank to disburse it.

To estimate what amount you can pay monthly on your loan without going into a challenging situation, it is important to calculate the following:

A (Income) Amount B (Expenses) Amount 
Sale of goods   Purchase of goods and materials  
Income from rent   Salaries and social securities  
Income from other companies   Transport expenses  
    Rent   
    Expenses for electricity, heating, phone etc.  
    Taxes   
    Advertising  
    Payments on loans & interest  
    Other expenses (such as insurance, repairs, accountant etc.)   
Total Income (А):   Total Expenses (B):  
Net revenue (А - B): 

Net revenue - Monthly expenses for owner’s allowance = Remaining amount of funds

The remaining sum is the amount that you can rely on and use to repay your company loan. It is recommendable that you do not use the entire remaining amount for instalments on a loan – it is good to set aside a part of it for unforeseen expenses and investments.

What kind of business loans do the banks offer?

Several main types of loans offered by the banks:

  • Investment loans – they can be used for extending your business; for instance – for purchase of machinery, repairs of production or commercial facilities etc. 
  • Loans for operational purposes – these loans serve for covering short-term needs for funds for business purposes, for instance for extending the range of goods offered; 
  • Leasing used for financing the procurement of goods for business purposes, with no need for additional collateral as the very good used as pledge;
  • Overdraft – aims at covering temporary necessity for funds when the company’s account balance is insufficient. The interest is paid only on the amount taken out, for the number of days used

What is the difference between the “fixed” and “floating” interest rates?

The fixed interest rates are defined in the loan contract and remain unchanged for the entire period. The ‘’floating’’ (variable) interest rates are used most often for long-term credits. The floating rates are a combination of base interest rate plus and an addition to it. The addition is fixed while the base interest rate is changed on a certain period. 

What raises the cost of your credit?

  Bank 1 Bank 2 Bank 3
Interest      
Interest due for the whole period of the loan      
Loan application processing fee
Evaluation, submission and approval of application      
Possible fees upon disbursement of credit
Flat disbursement fee – paid upon disbursement of the loan, usually a percentage of the entire amount      
Management and processing fee – could be a flat or yearly fee, usually a percentage of the loan amount or of the remaining part of the loan       
Commitment fee – due with overdrafts and credit lines, calculated as a percentage of the authorized loan that is not used; usually – a monthly fee      
Fees related to the collateral
collateral appraisal      
notary fees on the mortgage facility      
insurance of collateral      
Fees, usually not taken into account
fee for:
- early repayment
- partial early repayment
- change of loan conditions