Almost everyone knows what banking is nowadays, but most people have no idea of the intricacies of the banking sector. From retail banking to investment banking, there is something for everyone.

But if you are a business looking for banking services, then corporate banking is for you. But what is it? And how can it help you and your business?

We answer these questions and more, so read on!

What is corporate banking?

Corporate banking is a division within a bank that provides banking solutions such as asset management and underwriting, among others, to large corporations and even small to medium enterprises.

Although corporate banks offer similar services to retail banks, their major difference is the client base and the amount of money and profit involved.

Only companies with a board of directors are eligible for corporate banking services. If your company is a partnership or proprietorship, you should look for alternatives such as business accounts.

What are the characteristics of corporate banking?

The corporate banking department of a bank usually has the following characteristics that separate them from other forms of banking. They are:

Customers

A corporate bank serves small and medium businesses as well as large conglomerates.

Authority

A company’s corporate banking accounts are usually only opened after an agreement between the company’s board of directors. This happens either through an official vote or a resolution. The company’s treasurer is the one who opens the account.

Liability

Companies are regarded as separate legal entities, which means that the contents of corporate accounts cannot be the possession of its board of directors. And alternatively, the personal creditors of the board of directors are not entitled to the contents of the company’s corporate account.

Credit Rating

How a corporate account is run and maintained affects the company’s credit rating. This determines the company’s value and share prices and the interest rates that will apply to the company’s loans.

Bankers

The professionals involved in corporate banking are usually better educated, skilled, and well compensated for their work. This is to ensure that companies receive the best possible service.

What are the services provided in corporate banking?

Including regular banking services, corporate banks provide multiple benefits to their clients as listed below:

Credit

Corporate customers receive multiple credit products, such as loans from corporate banks. Credit is the largest source of profit for corporate banks as they charge much higher interest rates due to the increased risk associated with lending to corporate customers.

Treasury services

Corporate banks allow companies to receive treasury services which help them manage their working capital. These services are especially important for multinational companies as they facilitate currency conversion.

Capital asset financing

Companies involved in capital-intensive industries such as transportation, infrastructure, IT, and heavy manufacturing require the services of corporate banks. They can facilitate the purchase or lease of these businesses as they need expensive equipment. Corporate banks facilitate any loans or lease agreements required.

Employee Benefits

Corporate banks also provide retirement plans, healthcare plans, and payroll services to the employees of their corporate clients.

Commercial services

Corporate banks also provide portfolio and leverage analysis, debt and equity restructuring, real asset analysis, etc. Corporate clients can also avail themselves of asset management and underwriting services for IPOs.

What are the benefits of corporate banking?

Corporate banks offer their clients many benefits, making them a very attractive option for businesses of all sizes.

They are:

Provides in-depth accounting practices

Corporate banks offer detailed statements on business activities, allowing businesses to determine what expenses to reduce, which areas need more investment, and which revenue streams are the highest. This is especially important for startups as every taka matters for them.

Helps your business be more professional

Since how your business manages its funds determine how people perceive your business, it is important to have a corporate account as people will see it as a signal of legitimacy as well as the added benefit of having all your cash being managed under one name instead of multiple.

Helps your business grow

Corporate banks allow your business to grow more smoothly. It helps when you need to allocate more money to spend on your employees, you can use your account to partner with other businesses or even use it to make mass payments. They also help you monitor your business’s growth with more transparency.

Loans are easier to acquire

Having an account with a corporate bank for your business allows potential investors to see how you have been running your business so they can make an informed decision. Whether you are looking for a bank loan or a private investment, having a corporate account will increase your chances of getting one.

Easier tax auditing

Your business must have a corporate account as the transparency it provides will be beneficial for tax purposes. It can help you determine accurately how much of your business is taxable based on the net profit of your business.

Conclusion

Nowadays, businesses must have a corporate banking account as it can help them in several ways that would not be available to them if they were to take different services.

Apart from their legitimacy, the transparency and top-class service you can expect from a corporate bank can help your business grow.

Hopefully, this article has helped you get an idea of the benefits of corporate banking, and you will now be able to make a more informed decision.