A current account is opened for business purposes, usually, to carry out their ongoing business transactions. Current accounts, also known as chalu khata,  are generally zero-interest accounts that are associated with businesses with huge and frequent transactions. But these are used for other kinds of entities as well as they have many advantages associated with them.

Advantages of having a current account

Better Management: One of the main features of a current account is the ease it offers that allows one to manage their finances. You can withdraw or deposit as many times from this account without giving any prior notice to the bank, thus enabling seamless business transactions. The customer can withdraw from the current account without any limit only subject to banking cash transaction tax, if at all levied by the government. Furthermore, one can also avail 24-hour phone banking, doorstep and internet banking. Having a current account also allows one to pay creditors with various other services such as demand drafts or cheques.

Better Business Reputation and Credibility: Reputation and image are two things that build the credibility of a business entity. If one has a current account for all business transactions, then the same highlights professionalism and therefore, it is treated as a sign of seriousness and trustworthiness towards the business. Since demand drafts and cheques are issued in the name of the business, then it promotes the company as well. Furthermore, it also helps in maintaining transparent records of inflows and outflows of all the transactions.

Map Business Growth: Having a savings account to for personal as well as business purposes can be disastrous as it’d be difficult to track or map the growth of business or segregate it from personal expenses. For instance, if one uses the same account to carry out all monetary transactions and if the business runs into loss but the personal finance are unhindered, then it’d be difficult to keep track of businesses’ financial health. Thus, having a current account helps one segregate their personal and business transactions to understand if the business is a profitable one or not.

Prove Creditworthiness: It so happens in businesses that lenders and creditors would want to check one’s creditworthiness before lending credit. If one already has a current account, then this process becomes simpler. One can give them a letter issued by their bank mentioning that the business functions under an existing current account. Also, creditworthiness can be checked by using interbank connections and transactions. For instance, if you have import/export business, then you need to show a letter of credit to foreign parties. Having a current account helps ease out this process.

As observed, opening a current account has a lot of advantages as it helps in seamless functioning of business.