South Africa’s banking sector is experiencing just as many difficulties as every other business because of the deteriorating economic outlook, says Andries Kok, CFO of PayAccSys. And, just like every other business, banks are seeking ways of increasing their income.
For the banks, this is an especially difficult period because heavily-indebted consumers are battling to pay back loans, and there is the very real risk that companies could collapse, leaving the banks at the mercy of liquidators.
As a result, banks are going to seek ways of bolstering their income, and not just through offering more credit lines to those who can afford it, but also by bulking up the charges on your company’s bank accounts.
The variable fees banks charge – which contrast to the base fee – are likely to continue climbing at around inflation for the next few years, as they have over the past few. With inflation currently at 7%, this quickly adds up.
In addition, banks have recently taken to charging companies for the privilege of having an overdraft, even when they don’t use it. The implementation of other new charges may well follow.
These charges are often unclear and many people do not scrutinise them to find out exactly what they are paying for.
Yet, bank charges are a very real way of cutting down on your operating costs and bolstering your bottom line.
Depending on what products you have, and what size company you are, bank charges could be accounting for anywhere between 2% and 3% of your operational expenses.
Just cutting that down by half could add thousands more to your bottom line each month.
And, there is a way to do this.
In the salary payment process, for example, it’s possible to shift to a payments provider who can cut the costs of your salary run in half. Depending on the service provider you use, you can save as much as 70% of the cost of running salary payments, which can add up to a substantial amount. The potential savings increase the more staff members are being paid and the more frequently salary payments are processed.
To work out just how much your bank is charging you may not be that simple, because you need to drill right down, and probably spend a few hours in the bank quizzing the manager.
However, one way of working out whether things are getting out of line is to develop a budget, and then monitor when a line item overruns the amount you should be paying for it. This will then raise a red flag, and allow you to shop around – as more and more people are doing as they seek value for money.
There are alternatives that business owners and FDs can investigate, and these options are generally as secure, if not more so, than the system you currently use, and – because they operate in a competitive environment – will pass the savings they get through economies of scale.
They also provide much more transparency, so you can see exactly what you are paying for each service.