You may have noticed that multi-banking has become common practice among the self-employed and business owners. Most of you now have at least two bank accounts, split between different establishments. This diversification often involves an account in a traditional bank as well as an online account. This strategy has its advantages and disadvantages, particularly when it comes to managing your cash flow.
In the following lines, we'll explore how you can optimize the management of your finances by juggling several accounts.
Why should you consider opening several bank accounts?
This practice is not only reserved for professionals, it can also be useful in a variety of situations. You might have a joint account with your partner, or perhaps one dedicated to your second home. As a general rule, as your assets grow, it's not uncommon for your number of bank accounts to increase.
Separating your personal financial transactions from those linked to your professional activity is an obligation for all business owners, including self-employed micro-entrepreneurs. However, there's an important distinction to be made here. According to the Pacte law of May 22, 2019, micro-entrepreneurs do not need to open a so-called "pro" account, but only a second account specifically for their business.
One of the main advantages of holding several accounts is that you can take advantage of the competition by comparing the rates and conditions offered by different banking institutions. From account maintenance fees and intervention commissions to interest rates and credit card costs, every element can vary. By adopting this approach, you'll be able to choose the banking products offering the best value for money. This diversification is also a precaution in the event of changing conditions at your current bank. The favors granted by your current advisor may not be maintained by his or her successor.
However, it's important to consider the potential drawbacks. The accumulation of bank accounts can lead to an accumulation of fees. Fortunately, online accounts often offer very competitive rates, the lowest on the market in most cases. This makes them a smart option for an additional account. Think of the free credit card and no account maintenance fees.
It's important to remember, however, that multiple accounts don't necessarily mean smoother cash management. It requires rigorous monitoring to avoid payment incidents or overdrafts that could generate agios.
How do you manage cash flow with multiple accounts?
Let's explore a few ways to manage your finances effectively using multiple accounts:
- Allocate specific accounts to your activities: divide up your operations by assigning them a dedicated account. This allows you to personalize your business strategy. You can easily navigate between your accounts, set up direct debits and make transfers. In general, you can have up to 5 accounts, and this process is even smoother with online banking.
- Involve your management team in financial management: each department can have its own independently managed account, while remaining under your supervision. You can distribute credit cards to individual departments so that they can manage their expenses independently. This gives you a clear picture of the financial situation in each area.
- Spread your financial flows: direct around 60% of your flows to your main bank and 40% to your secondary bank. This strategy allows you to make the most of the advantages of each, by exploiting their complementary services and skills.
Having several business accounts doesn't have to hinder your cash management. On the contrary, it gives you exceptional clarity in tracking all your business movements. What's more, the savings you'll make by choosing the most advantageous offers and negotiating rates are not to be overlooked.
Additional accounts can also give you access to innovative features, while a single banking relationship exposes you to the conditions imposed by your banker.