If you’re trying to understand what is an operating account, there’s a good chance that you’re looking to organize your business banking activities.
If that’s the case, you’re in the right place. In this article, we’re going to tell you everything you need to know about business operating accounts and more.
Feel free to use the table of contents to jump ahead to the sections that are most relevant to you.
Table of Contents
- What is an Operating Account?
- Operating Accounts 101
- Operating Account vs Checking Account
- Ready to Explore Your Options?
What is an Operating Account?
An operating account is a business bank account that is dedicated to receiving payments from customers and sending payments to vendors. Additionally, due to a higher volume of both inbound and outbound transactions, most businesses choose to use a low-cost checking account to meet their operating account requirements.
Operating Accounts 101
In order for an operating account to be effective, there are several factors that need to be considered. Which specific factors are applicable to your business will depend on your business activities, the number of transacting parties, and the banks that your business can realistically open accounts with.
That said, the following should act as a starting point to help you find the best possible operating account for your business banking requirements.
Factors to Consider When Opening an Operating Account
The specific countries you are sending and receiving the money to and from can impact where you should open operating accounts. This is especially important if your business is registered in one jurisdiction and engages with vendors or receives payments from customers in another jurisdiction.
Additionally, it’s worth considering which countries are on your jurisdiction’s blacklist (e.g. EU list of non-cooperative countries or FATF greylist) before deciding where to open. This is important because opening in countries that your jurisdiction designates blacklisted can cause many issues when sending transactions.
Most businesses require some level of integration with management or accounting software for streamlined reporting. That said, while banks in developed countries like the US, UK, Canada, etc., integrate with such platforms, many international banks do not. So, if you are looking for an international operating account, you should keep this in mind before opening.
Businesses that regularly engage in cross-border transactions often use international transfer services to reduce foreign exchange costs and batch payments. Again, not all international banks allow these integrations. So, if integrating with such services is a requirement of your business, you should confirm which banks allow for it before applying.
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Operating Account vs Checking Account
As mentioned above, an operating account can be a checking account. However, it is typically designated for specific business activities, such as receiving payments from customers and sending payments to vendors or contractors.
That said, there are other applications for checking accounts as well. We’ll explore one of these common account types below.
Operating accounts are designated for specific activities, such as sending and receiving payments to and from clients and vendors. These accounts are typically standard checking accounts with low transaction fees, low deposit requirements, and minimal maintenance fees.
Payroll Checking Account
A payroll checking account is a dedicated account that is used to distribute payroll and compensation payments to employees. Payroll checking accounts are often held separately from other business bank accounts. They are also usually based in jurisdictions where businesses have a high concentration of employees.
Ready to Explore Your Options?
If you would like assistance navigating your banking options at home or abroad, we can help.
You can access GlobalBanks IQ, our international banking intelligence platform, in just a few clicks. Unlock our bank database, individual bank profiles, account opening strategies and reports, banker scripts, and more.
But, if you want a 100% personalized account opening service that taps into our team’s expertise and provides direct banker introductions, you can get started with GlobalBanks Insider.
Of course, if you have any questions, please contact us directly.