Banking
A bank is an institute which acts as a payment agent for customers; it also borrows and lends money. Banking exists in the commercial sense and the business sense. The definition of a bank does differ from country to country, within the UK a bank:
- Conducts current accounts for customers
- Pays cheques drawn
- Collects cheques for customers
Within its history, banking influenced economies and politics for centuries. The primary purpose was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory and for many centuries banks only dealt with business not customers; however times have changed and now commercial lending is an intense activity with banks carefully analysing the financial condition of their clients to determine the level of risk in each loan transaction. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions is pooled.
The term banking describes the relationship between an individual or a company and their bank. The term could describe the cashing of a cheque or the addition of an overdraft to an account as well as the application of a loan or the withdrawal of your funds. Your bank account is the financial position between you and your bank. When your account is in credit the bank owes you money, when your account is overdrawn you owe the bank money. A bank cannot disclose the details of the transactions going through your account unless you have consented. A bank also cannot close your account without reasonable notice to you because cheques are outstanding in the ordinary course of business for several days.
Banking can also benefit businesses in the way they can provide businesses with loans and overdrafts; they can also provide businesses with business banking accounts to allow you to keep all of your finances in order and to provide you with a business bank card and cheque book.
For more information about banking and your business get in touch with ARCH Credit Servces today.