If you are the size of company that needs corporate banking, you might think you wouldnâ€™t be worried about fees or the best rates (in other words you prefer best service over low cost), but you didnâ€™t become a well performing business by wasting money. While fees are a concern, the most important thing, however, is that your company has the financial services available to meet your needs.
Just because your business is incorporated, doesnâ€™t mean you need Corporate Banking Services. Typically a business that brings in more than one or two million in revenue could benefit from corporate banking services.
While it would be nice to find the lowest fees for corporate banking, there are few, if any, credit unions that offer corporate banking services. Most larger banks will offer a variety of these corporate banking services, and you should understand that there will be fees associated with most of these services. You can and should definitely shop around for rates, but just make sure the services offered will meet your corporate needs.
If youâ€™re not familiar with some of the services offered, or are just curious what is encompassed in corporate banking, weâ€™ve listed out some of the typical services below.
- Asset-Based Finance – Basically a very expensive, but perhaps necessary form of lending. Asset-based finance provides some loan options to provide working capital for a company that may be a startup or one that has already reached its lending limit. The loan collateral tends to be things like inventory, machinery, real estate or even account receivables and purchase orders. While this can provide some options for growth for your company, the interest can be very high, as high as prime plus 10%.
- Asset Management â€“ Services that help your company track all aspects of assets such as property tracking, resource tracking, human capital, cash balances, credit and debit cards, brokerage services, and loans
- Card Solutions â€“ Whether you need to accept credit cards or offer credit cards, debit cards and gift cards, you will need card solutions.
- Debt and Liquid Products â€“ Raising debt capital and managing and optimizing investment portfolios.
- Electronic Trading Services â€“ These are usually the tools used to allow self service investment trading. Depending on the size the financial institution, youâ€™ll see more variety in the electronic trading services offered. You typically will only see these services offered for corporations by large banks or dedicated investment companies.
- Endorsed Programs â€“ Also known as affinity banking, this is where your corporation offers financial services to your customers or members, but those services are actually provided by the financial institution.
- Equities â€“ Invest and grow. Thatâ€™s the basic strategy here. Place funds in the market, raise capital, and grow your portfolio, all while managing your exposure.
- Foreign Exchange â€“ A market built off of trading money based on the value of the dollar, the yen, the euro, etc. Quick trading happens here, such as day trading. This is investing is best left to the professionals of large banks and investment companies.
- Futures â€“ Another area of trading best left to the professionals of banks and dedicated investment services.
- Investment Solutions â€“ While some smaller banks and credit unions may offer these investment solutions, most corporations will want to stick with the larger banks and investment houses. The fees are higher, but so is the expertise, and so are the returns.
- Leasing â€“ Essential for most businesses, leasing needs can be addressed well by most mid size to large banks. Larger banks will have experience in many areas that can benefit you, such as global vendor finance, tax-exempt finance and capital markets.
- Merchant Services â€“ This is an area where you need services that can meet you volume requirements for credit card transactions. You can certainly find some low cost merchant services solutions, however, many corporations prefer the hands-off approach, or a completely managed solution.
- Mergers & Acquisitions Advisory â€“ It is wise to let the professionals help you with these areas. Most large banks have M&A advisory services to help you get through areas such as corporate valuations, leveraged buyouts, tracking stock and joint venture agreements.
- Treasury Management Services â€“ Also known as Cash management services, these are provided by most larger banks. Some community banks and credit union banks might offer these services, but again, the most important thing to know is whether or not the smaller institutions can meet the needs of your corporation.