How do we bank as a distributed company and how you should do it too
This is not a paid endorsement by any service provider by all means.Â
Our company, Anywhere Consulting is a distributed business. It means that we do business without borders. Our legal entity is based in Estonia but our team is global. But how do we bank, what service provider do we use, and why you should use the same too? In short, we use Revolut Business for our business banking and I opened one of my personal accounts at Revolut as well.
The problem with traditional business bank accounts
The question really isn't about business bank accounts but with all traditional banks. Personally, I have used several banks for business and personal reasons from HSBC to ERSTE and others. I had the same problem with all, no matter which country they are based in.Â
1. Poor, I mean amazingly bad customer service
No matter if they have nice people on their team, the very basic foundation of their customer service is broken. Usually it has to do with the customer service issue timeline: I have a problem -- I email them or message them over their online platform where I logged in -- they tell me I have to call them as my problem is really special (every problem is) -- over the phone I encounter a phone-bot or dial-monster and it takes endless minutes until I get a human over the line -- at this point, they either solve my problem after I have provided them with a bunch of ID numbers and cut through an overcomplicated verification process OR they tell me that my problem can be done only offline -- I have to go to the branch. On foot. Personally. During business hours. Also, their phone line is live during their indicated business hours. Oh, and they answer emails within 31 days.
I know it sounds harsh but it's 2018. There's a thing called the internet and customer services run on instant messages. Exclusively. No phone and no "come to our branch." I understand that there are situations and type of businesses that need serious verifications, but I'm a small business or sole-entrepreneur, I don't deal with zillions. I just need someone to help me with the issue of my poor tiny business debit card.Â
See my point? Get the feeling? Meanwhile, Revolut offers 24/7 customer service over instant messages on your mobile or desktop, no matter which timezone you are in. I tried it. They are super helpful, quick and great.
2. Hidden fees and bad rates
Of course, there's a thing called free account everywhere. However, there are loads of hidden fees even if your account is labeled free. Also, there are banks that charge you a small amount just because you are their client. Yeah, I don't get it either. But let's say you have a free account. This means, your business debit card is not free, there should be an annual rate for that. And I'm not talking about credit cards, but only about simple debit cards. Also, there are countries where the government applies a special rate on every bank transfers called transfer tax or something like that.
But let's say you are one of the lucky few who has a free account with free cards. Your bank will certainly charge you amazingly bad rates for exchanges. I own a distributed business and my clients are from all over the world with their own currencies (mainly EUR, USD, and GBP). In a traditional bank, this means 3 separate accounts. Or you have 1 account and you pay for exchange rates. I've done a calculation before on my banking fees - traditional bank, a big one in the UK - and I lost around 2-5% of my company's revenue just on banking fees / bad exchange rates.Â
Meanwhile, at Revolut Business, I hold many currencies in separate accounts and if I want to exchange, I get interbank FX rates. I also pay a simple fee for the Business account, which comes with almost unlimited physical business cards where I have to pay a one-off cost on mailing it to me and I have an unlimited amount of virtual cards for free which I can use for stuff purchased online (most of the stuff I purchase to my business is purchased online anyway).Â
When it comes to managing your business, a simple service can save a lot of time for you. When it comes to business banking, there are a few things that can be done with a bare minimum and there are things that can be added as an extra.
The bare minimum is to have a user-friendly internet banking platform. You can't imagine how many banks fail to comply with this expectation. They are heavy, overcomplicated and super-slow. Not to mention they look ugly. The bare minimum is the option where you can download annual transactions for your accounting or you can simply just hook up your bank details with an accounting software for your accountant. There are many banks that are simply incapable of achieving this.
Extra features can save you time. These services may include: helping with managing company expenses, a hand for your accountant or just simply a cashflow management system that tracks your expenses in an easy-to-understand method. Revolut offers simple expense tracking, all employees can get a business debit card, and all cards are managed and tracked from a simple dashboard. Clearing invoices and requesting payment is also simple to do. Other service providers like Holvi, they integrate basic accounting into their offerings for clients.
There are other new and hot players in this field apart from Revolut. To name a few: N26, Holvi, and Transferwise, the latter is currently rolling out its new debit cards for Borderless Business customers. All of these can be opened fully online but you need to verify your business and yourself -- which is straight-forward and easy. Sadly, the majority of people don't know about these alternatives and still bank with traditional institutions. I get it:Â when you are a bigger company, you need other banking services like business loans and company credits, plus you need a physical bank where you keep your funds intact. But for small distributed businesses generating less than 1 million USD revenue annually, new emerging financial technology service providers are a must to try.Â
At Anywhere Consulting, we help entrepreneurs to launch, build and grow their remote business. We provide support and consulting services as well as educational products to overcome the challenges of remote businesses. If you are a freelancer who wants to launch a distributed business or you already have an established business but want to grow remotely, we can help you.
