Business Banking: How Banks Leverage Entrepreneurs For Wealth

Business Banking: How Banks Leverage Entrepreneurs For Wealth

As a business owner, you rely on a quality business banking relationship to help you be successful as banking is an integral part of paying yourself, your employees, and your vendors. And while having a quality business banking relationship is important, it’s equally important to understand how banks leverage your business economically for their own financial success.

Many business owners I’ve met have explained that they get an amazing deal on their merchant services from their bank because they give them 100% of their business. Some have even explained high signing bonuses to move their merchant services.

As a merchant service provider, even I started to wonder where all this money was coming from so I decided to do a little research.

According to the FDIC, Bank of America had a net income of 6,668,000,000 in their first quarter of 2018! Yes, that is over 6 billion with a capital B! That is their profit after all their expenses! Bank of America, according to Statista, earned in excess of 18,000,000,000 in 2017. That was eye-opening, so I chose to dig a little deeper to evaluate a few areas banks leverage business owners to create wealth.

Here are 4 of the top ways banks leverage your business to create wealth:

DEPOSITS

One of the most powerful ways banks create wealth is by accepting your deposits for virtually nothing in return and funding loans against your deposits. They convince you of the value they bring when you give them your money for free and they earn 5-10% interest by lending it to a business owner needing equipment financing or an SBA Loan.

INTERCHANGE REIMBURSEMENTS

If you accept credit & debit cards in your business, you may not know that it’s not only Visa making millions of dollars off the backs of business owners. It’s the banks that issue the debit & credit cards with all the frequent flyer miles that earn 80% of the merchant fees you pay every month. The banks attract new members to their bank by offering high rewards cards and then make you pay for them. Visa, MasterCard, and Discover only get a smaller piece of the action as we discuss here.

CREDIT CARD INTEREST

Banks issue credit cards, and purchasing cards for business banking clients to pay vendors with, allowing banks to earn income from the interest earned from the balance on the credit card and any other expenses related to their programs. This becomes another profit center for banks to profit from their business banking clients.

CREDIT CARD PROCESSING

Finally, banks offer credit card processing to earn additional revenue from their business banking clients. With over 90% of the banks not having ownership of a credit card processing company, they turn to one of the dozen credit card processing platforms in the U.S. under a referral program or a white-label program. The greatest misconception about the credit card processing offered to business banking clients is that they get some form of a discount by “processing” with the bank. This is inaccurate since the banks’ primary objective is to make money and they are often in the same position as some business banking clients, switching processors to find a better deal. You can learn more about the bank merchant services here.

The intent of this article is to open your eyes to how banks operate and the economics behind how they profit, not to shame banks for making money for providing a quality service. It’s important to remember the value you bring to the bank as a successful entrepreneur and how critical you are to their success.

If you are in the process of evaluating your business banking relationship and would like a referral, don’t hesitate to start a conversation! We’d love to help!

10 QuickBooks Online Apps That Will Save Your Business

10 QuickBooks Online Apps That Will Save Your Business

With the rapid advancements in technology, competition, and the increasing costs of human capital, the one thing I notice when I meet with business owners on a routine basis is that they are very short on time, especially for those that haven’t outsourced their accounting. If you’re a business owner, bookkeeper, or accountant using Quickbooks Online, here are 10 QuickBooks Online applications that will save you serious time and money managing your, or your client’s, business.

  1. ShogoAutomate Your Reconciliation

Have you ever wished there was a way to transfer all the transaction data from your POS to your accounting system without having to spend hours reconciling your reports? Well Shogo appears to be the way to go! This service allows you to seamlessly integrate the flow of information from your POS system to your Quickbooks Online accounting system so you don’t have to! Currently, Shogo will integrate your Quickbooks Online to your ShopKeep, Lightspeed, NCR Silver, Micros, Square, Lavu, Cake, Breadcrumb, Toast, and Touchbistro system. If you have one of these systems and you’re looking for a solution, this may be what you need.

  1. PrimaSeller – All-In-One POS Solution

Primaseller helps retailers run operations more efficiently by consolidating the POS, Inventory Management, eCommerce, Shipping Management, and Purchase Management into one system that tracks everything back to Quickbooks Online. What I appreciate the most about Primaseller is the integrations, it connects seamlessly to platforms like ShipStation, Ebay, Amazon, Shopify, WooCommerce, & BigCommerce. If you’re a retail store considering expanding your sales channels, Primaseller could be the partner you’re looking for to help you do just that without adding more hours to your work schedule.

  1. Unify – Data Integration

Unify provides a solution that automatically syncs all your orders, inventory, and customers from your eCommerce stores and marketplaces to QuickBooks Online, eliminating the need for any data entry. Unify has integration with over 70 eCommerce platforms, marketplaces, and business systems so it’s likely that they can provide a solution that will save you time as a QuickBooks Online user. You can sleep well knowing Unify is working on your behalf to save you time and money!

  1. HomeBase – Employee Time Management

Homebase is a free cloud-based time clock and time sheet platform that allows you to track hours from anywhere in the world saving you hours of time preparing payroll. As a QuickBooks Online user, you can use Homebase without having to worry about manual reconciliation since it is available in the QuickBooks Online app store!

  1. DAVO Sales Tax – Automated Sales Tax Solution

Paying sales taxes probably isn’t on your list of favorite things to do, so let DAVO do it! DAVO is an automated sales tax solution that integrates to your POS system and automatically pays your sales taxes for you. DAVO is integrated to QuickBooks Online so as the system handles the payments of sales taxes for you, you won’t have to worry about having to reconcile the data with your system because DAVO does that for you!

  1. ShipStation – Shipping Software for eCommerce Fulfillment

Selling your products online is both exciting and overwhelming. With ShipStation eCommerce retailers are able to use this online software platform to manage their orders, create shipping labels, automate customer updates, and track packages. The benefit to QuickBooks Online users is ShipStation will automatically send order information to QuickBooks Online when orders are placed. It will also automatically post invoices to your accounts receivable, create customer records, and send sales tax reports to your selected tax agency.

  1. 1Dash – Productivity

One thing that comes with running a business and the advancement of technology is, LOGINS! We have so many websites to login into that it can become too much to manage along with everything else we’re responsible for as entrepreneurs. 1Dash is the solution that QuickBooks Online users can turn to when they are looking for a better way to manage all aspects of running their business. 1Dash is an affordable, cloud-based platform that creates a single dashboard to keep track of all the moving parts of your business. If you can imagine logging into one website to view your Quickbooks Online data, banking, social media, team chat, calendar, and email, then you can imagine 1Dash.

  1. Sourcery – Automated Accounts Payable  & Receivables Solution

Sourcery helps businesses like AirBnb, DropBox, and Elephants Deli automate the AR & AP process, saving them hundreds of hours per year in their business. As your business grows, so does the number of vendors and suppliers you have, and subsequently, the number of checks you write and expect to receive in a timely fashion. The problem is, you’re already maxed out on time focusing on growing your business. As a QuickBooks Online user, Sourcery directly integrates to your system allowing you to pay all your vendors with one click, get spend data in real time, digitally manage invoices, while also taking advantage of their white glove approach to customer service. I have heard clients of ours rave about the attention to detail that Sourcery brings to the table to when helping clients implement their system.

  1. FundBox – Quick Access To Capital

Are you tired of waiting 30, 60, or 90 days to get paid by your clients? FundBox solves this problem by allowing you to get an advance on unpaid invoices. This gives you the capital you need to expand your business without having to wait for your money to come in. FundBox pulls in the unpaid invoices data from your QuickBooks Online account and provides you with an easy way to fund those invoices in as soon as the next business day.

  1. Bill & Pay – Integrated Payment Processing Solution

Bill & Pay is a fully independent invoicing and payment processing platform that integrates directly with QuickBooks Online and other Quickbooks versions. Their synchronization process eliminates all double entry of data. You create your customers and invoices in your accounting system and Bill & Pay handles the details for you. The benefit to using Bill & Pay is you can choose your own merchant services provider, allowing you to shop for the best service and price for your business. We have helped merchants implement this system and what I appreciate the most is the ability to get help setting up the system from a live person.

I hope you enjoyed this article. If you need help determining which application is right for your business or would like help implementing one of these tools in your business, don’t hesitate to reach out to us. We will walk you through step by step to help you improve your business.