Choosing the right bank for my business in Romania will greatly help me, simplifying my money transfers.
1. What to do before opening a bank account: analysis and discussions
1.1. The preliminary analysis ➡️ shortlist
Before I rush to open an account, it is a good idea to make a preliminary analysis: I may look on the webpage of the National Bank of Romania to see which are the most suitable banks for what I am looking for. I may also analyse which of the banks are best integrated with international financing facilities, for example with the European Investment Bank or the European Bank for Reconstruction and Development, because these facilities will be positively reflected in more attractive interest rates for me from my preferred bank of choice.
Based on the preliminary analysis, I make a shortlist with my favourite banks.
1.2. Discussions ➡️ checklist
Then I ask each bank in the shortlist for their list of fees, commissions and interest rates, so that I can compare them. When I tell each bank that I am doing a compared analysis of the facilities offered by other banks, in order to be able to make a suitable decision for my company in Romania for the years to come, this should motivate each bank to present me what they have the best and to convince me to become their customer.
The types of packages are named differently, depending on the creativity of the Marketing Department of each bank at that moment: Standard or Premium, Silver or Gold etc.; irrespectively of how they are called, I need to understand the structure of those packages and apply it in the best possible way to the dynamics of my company in Romania, so that there is a good match.
For example, one question I may ask is how long it will take from the moment when my company's activity is hypothetically reduced to 0, until someone in the bank would advise me that the Platinum package, for which I continue paying tens or hundreds of euro a month, is no longer suitable for me - and that it would be more convenient for me, temporarily, to switch to a Basic package, which would allow me to optimise costs. If the answer is “immediately”, it means that I am in good hands and will benefit from human attention and quality support. If, however, the answer is anything else, including a raising of shoulders, then there is a good chance that I am just a piece in a mechanism, without too much flexibility - and it is a signal that I am in the wrong place, discussing at the wrong table. Rigidity in mechanisms and procedures will not help me when, for example, a new crisis will require quick solutions to liquidity problems. I may be surprised to discover, after a year in which the activity of my Romanian company has temporarily been very low, that I paid without noticing tens or hundreds of euro per month for a premium package which I did not actually use - and no one in that bank noticed or thought that maybe I do not really need that premium package.
The discussion with the preferred banks may start from the moment of depositing the share capital necessary to set up the company at the Trade Registry.
“Do you usually finance this type of activity that I carry out? Are you open to funding me in the future if I need it? If so, what would be the conditions? Can we do a simulation on a series of virtual data, just to get a first idea of what our collaboration might look like? This is, in brief, the business plan… And if we are to look at savings, what is your policy in this field, how can I benefit from the best conditions?”
This way, I will see the degree of openness of that bank to working together not only as a custodian of my current accounts but also as a financial arm of my activities, either lending or saving. My business will start producing and, in the first years, the commissions that I will pay to the bank for the use of current accounts will feed into its profits. So I may consider it natural for the bank to return the favour when I have accumulated higher amounts that I want to deposit; but it is good to ask about it, from the beginning, otherwise, I may be surprised to discover, after years of collaboration, when I want to open the first deposit, that the bank offers me an insignificant interest rate, forcing me to transfer the money to another bank, where I will be able to benefit from more advantageous conditions - but I will have to accept the direct costs of the transfer, as well as the indirect costs of resetting the scoring, grading and rating system.
Here is what a checklist might look like for the first discussion with any of my favourite banks:
Questions regarding account opening
How long does it take?
What is the procedure for foreign citizens?
What documents are required?
Can I open another account remotely or do I need to be physically present?
What is the nearest branch?
What are the fees for accounts and foreign exchange transactions?
Questions regarding account operation
Generic:
Does the bank offer two-step authentication via an app, or SMS, or token? // I have to make sure that the bank's SMS will arrive on my mobile with a foreign number when I leave Romania. Especially in the pandemic and post-pandemic period, when the freedom of movement is affected
What happens if I forget my password?
How long can I keep my account open if I do not have transactions?
Can the bank offer me a double signature system, in which the accountant prepares my payment orders on the bank's platform, and I just log in and sign them electronically?
Fees for current transactions:
I issue invoices and receive money from clients in my bank account; what are the bank’s conditions, commissions and fees for this type of transactions?
I pay taxes and utilities; what are the bank’s conditions, commissions and fees for this type of transactions?
Loans:
At some point, I might need a loan to continue my activity: what are the conditions of the bank? Not only the interest but also the rest of the conditions.
Overdraft:
How can I get it and what is the maximum value?
What are the conditions of the bank?
Savings and deposits:
At some point, I will have a surplus and I want to place it in a deposit; what are the conditions of the bank? Not only the interest but also the rest of the conditions.
Questions regarding closing the account
What are the closing fees? How long does it take?
Then I make a table, in which the lines above represent the lines in the table (Question 1, Question 2, Question 3 etc.) - and each column is for each of the banks I go to talk to (Bank 1, Bank 2, Bank 3 etc.). This way, at a glance, it will be easier for me to compare them.
In addition, I have to look at the ranking of banks in terms of equity. A good starting point in this regard is the National Bank of Romania’s webpage, which displays these rankings. The higher the equity, the higher its stability and its willingness to invest in my business in Romania.
For example, if the bank offers me the opportunity to create high-interest deposits, it is a good indicator that I can keep my money safe at that bank, even adding value to my business. However, at the moment, there are several banks that offer very low interest rates on deposits: one dollar a month interest, at a deposit of, say, EUR 20 000, or a hundred dollars a month interest for a deposit of EUR 1 million is not a very motivating interest rate.
And this is a good time to ask myself:
If this bank has the habit of offering me high-interest loans and low-interest deposits, why am I still here?
All these questions, from this entire checklist, can be placed in a questionnaire, and before I open my account at any of the banks, I may take the questionnaire with me and take the opportunity to ask each of them, so that I can compare. After filling in the questionnaire, for each of the banks there will be a score - and then, depending on the score, I will know if it is worth considering opening an account at a certain bank or not.
Apart from the objective, quantifiable part, also important is the subjective part: how well received I feel by the representatives of that bank - and at what hierarchical level. I need to have a stable point of contact that I can call at any time without having to repeat the context several times. To which I can go at any time - by appointment, of course - without having to stand in line. A person who, at the same time, is fully prepared to assist me remotely. Especially during a pandemic, it can be frustrating to sit for hours at the entrance to the bank just to enter for a minor transaction, so it is more than useful - even necessary - to confirm that the bank operations of my business in Romania will continue to be fully operational also at a distance, when either I or they will be remote. In addition, I need to see how easy it is to interact remotely with that bank:
Does it have easy-to-use applications, or does it all come down to email?
How many clicks do I have to perform in their application to reach the desired result?
For a single transaction, an extra minute may not matter, but when I multiply this by all transactions in a year, I may realise that I am wasting a lot of time with one bank, while another can help me gain time.
var bankSelectionCriteria: BoolThe difference is also made by the position from which I go to talk to each of the banks, from the point of view of my own assets, as an individual - and the level in the bank hierarchy at which I am received for a discussion. If I belong to the category of so-called High-Net-Worth Individuals, the degree of openness that I will benefit from the bank for my business in Romania will be higher. However, I will have to be open, in my turn, to explain the source of the money: AML/CFT regulations are becoming more stringent.
By the way, I am not restricted to having just one bank account for my business in Romania: I might be better off with having more. Depending on various criteria - for example, which bank most of my clients already have accounts with, or which other bank offers better interest rates - I can choose to open accounts at several banks. I will do it, anyway, when I open an account with the Treasury to facilitate tax payment transactions. Lesson learned: I need to think wide: I can have an account with at least 2 banks in the country where I go to do business. It is not good to depend on a single factor. Especially since there are times when the banking applications of one or the other of the banks will simply no longer work. Low risk, but with serious impact. Business continuity can suffer: I may end up not paying my suppliers on time, affecting my rating and recording penalties, or I may end up not paying salaries on time - and I will certainly have to compensate for the bank’s problems with my own time: instead of making transactions through the bank's mobile app, I will have to go to the nearest branch, which will cost me time, especially if I have to wait for pandemic-specific security measures. And if I am out of the country, it becomes practically impossible. To minimise the impact of such a situation, I need to have a discussion in advance with each of these banks, adding to the initial discussion list, in which to get answers to at least the following questions:
Apart from planned maintenance checks, which are always announced in advance, what is the longest period in which your mobile application has not been operational in the last year? Considering that my business depends on the proper functioning of your application, what do we do when I end up paying interest and penalty fees because the bank application does not work - and I cannot get to your branch either?
Expectations are that the minimum level of uptime services of the bank application will be 99.99%. So, if the answer is more than 4 hours a month, it is good to think about alternatives. Thus, redundancy is not always a bad thing, and business continuity must always come first.
2. Opening a bank account for my business in Romania
The account can be opened in a few hours. At this stage, I do not have to come to the bank in person. I can empower a representative, who can be, for example, from the accounting firm; the delegate will open the bank account in my name for the deposit of the share capital.
IBAN
Opening an account takes place the same day as going to the bank: the IBAN (International Bank Account Number) is obtained on the spot and is communicated to me. It is also a good idea for me to ask for the bank identification code, called SWIFT or BIC: it is then useful to include it in all invoices I issue to customers outside Romania: if they pay the invoice only by mentioning the IBAN code and without mentioning SWIFT code, they will end up paying extra fees - and I want to protect them from this inconvenience, especially since it is very simple for me to get this SWIFT / BIC code: I just need to know about its existence, to ask about it, and it will be very easy for the representatives of my new bank in Romania to offer it to me.
var iban: Int
var swift: IntTokens
It depends on which bank I choose, or, more precisely, if I have a preference for a physical token or an e-token. The e-token eliminates the need for a physical one, replacing it with a randomly generated code in a mobile application or sent via SMS to a mobile number, to be used as a second authentication factor, in addition to username and password.
A number of banks in Romanian still use physical tokens, while others use e-tokens. A physical token arrives at an address in Romania in a maximum of 7 days. Plus a few extra days if I prefer the bank to send it to me directly to a foreign address. an e-token is configurable from the bank's server and can be obtained much faster: either on the same day or on the next business day.
I can ask for multiple tokens remotely. I do not have to go to the bank.
var token: BoolMore about this subject, as well as many useful others, in the Amazon #1 New Arrival in International Taxes, MY BUSINESS IN ROMANIA™, now available also in the Apple Books Store and the Google Play Store.
