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Understanding Banking

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Business banking is the financial dealings with a bank which offers business loans, checking accounts, savings accounts, and money market accounts, particularly designed for businesses and not for individuals. In contrast, personal banking refers to transactions involving only individuals. Thus, business and personal banking are often interchanged with "personal" banking. The major difference between business and personal banking is that the latter involves more money as assets, while the former involves less. Because of this, business banking is seen by many individuals and organizations as a more lucrative choice.



Businesses depend largely on their banking business to provide payroll services to their employees. This is particularly true of large corporations. Large corporations generally have an in-house payroll service, which is run either by a human resource department or by one or more individual employees. As payroll processing services are extremely expensive, a corporation may save money by contracting out this service to an outsourcing firm. An outsourcing firm can provide businesses with affordable payroll services that are both reliable and cost-effective.


Payroll services are essential to all businesses, even those that do not employ a large number of employees. Businesses cannot afford to lose payroll services, especially in light of the expense associated with payroll services. Small businesses cannot afford to hire additional employees to manage payroll services. Moreover, small businesses may not be able to provide for payroll services on their own. In such cases, they can turn to other banks that provide such services. Some banks provide payroll services directly to businesses or through third-party payroll processing companies.


Small banks tend to specialize in a particular type of banking business. For example, some small banks focus on commercial lending, while others offer financing to small businesses and home buying. In addition, some banks focus on specific types of businesses. One example is commercial lending where such banks focus primarily on business finance, such as commercial mortgages and commercial loans. On the other hand, some banks provide residential lending, which entails working with borrowers who have little or no credit history and little or no collateral.


Corporate banking refers to banking that involves more than one bank. For instance, a corporation may establish a checking account that has its branches in various cities. The corporation may maintain various other accounts as well. The company may use corporate banking to handle its cash management requirements, such as short-term financing, merchant cash advance, invoice financing, repayment arrangements with suppliers, and employee payrolls. Corporate banking can also help a business to obtain the services of a mortgage broker, cash manager, or a mortgage lender.


Business accounts at banks offer a variety of advantages. These include access to a diversified range of financial products such as saving accounts, investment funds, commercial banking, and savings accounts. Business account holders can also improve their business image by opening a business account with a reputable bank. In addition, business accounts at banks offer various payment options, such as checks, electronic funds transfer services, debit cards, and a high-online processing service.

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