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The word deposit is familiar to many and often appears in everyday transactions. But as a business owner or financial expert, did you know that the term "deposit" has different meanings depending on how it is used? For example, the term "deposit" does not mean the same thing in business transactions as it does in banking.
In this article, you will find out what a deposit means, what advantages it has for business and what variants there are. You will also find out what types of deposits there are and why introducing a deposit policy can be crucial for your business.
What does a deposit mean in business?
The meaning of deposit changes depending on the context. In Indonesia, a deposit usually refers to an amount of money paid into an account for safekeeping or to facilitate transactions.
In business, a deposit serves as a guarantee or a sign of commitment in a sales contract. It helps prevent businesses from financial losses due to last-minute cancelations, especially by buyers.
The amount of the deposit is agreed between the seller and the buyer. Normally, the deposit is non-refundable if the transaction is canceled.
For example, before renting a property, the tenant can pay 10% of the total rent as a deposit in advance. Once the tenant has moved in, this amount is deducted from the final rent payment.
Other definition of deposit
However, the term " deposit" is not only used in a business context but is also a common term in the banking sector.
In the banking world, especially in Indonesia, the term "deposit" often refers to a banking product called “term deposit”. This is a savings product offered by banks with a higher interest rate than normal savings accounts.
With term deposits, the depositor must commit to saving their money for a certain period of time, usually one, three, six, 12 or 24 months. For example, if you opt for a term of 12 months, you can only withdraw the money after the entire term has expired.
These banking products are ideal for those who want to keep large sums of unused or idle money safe while earning interest.
Types of deposits in business
Different businesses use different deposit schemes. Below are two common types of deposits and how they work.
Customer deposits
A customer deposit is a sum of money that a consumer pays before receiving goods or services. For the customer, this deposit is a guarantee that the seller will deliver the goods or services as ordered. For the seller, on the other hand, it can protect them from financial loss if the customer suddenly cancels their order while production is already underway.
This type of deposit is common in high-value transactions, and the amount of the deposit usually corresponds to the initial costs incurred by the company to start production.
For example, let us assume that furniture company XYZ receives an order for 50 office desks. Before the company starts production, it requires a deposit of 20% of the total order value, or equal to the initial production costs, to protect itself from financial loss if the customer cancels the order.
Refundable deposit
A refundable deposit, also known as a security deposit in some cases, is a temporary deposit that is returned to the consumer under agreed conditions. It is often used when renting out properties such as hotels, apartment units, or vacation homes.
This is to ensure that the customer uses the property responsibly and in accordance with the rules.
For example, when you check in to a hotel, sometimes you have to pay a refundable deposit of, let’s say, Rp100,000. When you check out, the deposit is refunded if no damage is found to the property and all rules have been followed.
How your business benefits from the introduction of security deposit policies
Implementing a deposit policy can significantly improve business operations, especially by stabilizing cash flow and minimizing financial risks. Below you will find the main benefits of introducing a deposit policy for businesses.
Ensures a smooth cash flow
Receiving customer funds through an advance payment helps businesses manage their cash flow more efficiently. These funds can be used to cover immediate expenses and keep operations running smoothly while orders are being fulfilled.
Reduces financial risk
Deposits also serve as partial payment, reducing the risk of financial loss. Businesses can use these funds to cover production costs, minimizing the risk of non-payment or late payment from customers.
Secures the completion of the transaction
A deposit increases the likelihood that a buyer will complete the purchase. A buyer is less likely to back out of a transaction as they do not want to lose the money spent on the deposit.
Filters serious buyers
Requiring a deposit acts as a filter for genuine customers. It helps businesses avoid fraudulent orders and focus on buyers with serious intentions to purchase.
Make deposit management easier with Aspire
As your business grows, managing deposits manually can become a headache. Not only will you have to deal with deposits from customers, but also from business partners, which can quickly become overwhelming.
This is where Aspire comes in and offers a complete solution to streamline the management of deposits. With an Aspire Business account, you can create deposit invoices with just a few clicks and forward them to your partners via email. Need a smoother payment process? Send your partners a payment link where they can make deposits using their preferred payment method—be it a virtual account or an e-wallet.
Aspire’s payment gateway also makes it easier to collect deposits from customers. With support for over 26 payment methods — such as QRIS, e-wallets and credit cards — you’ll never miss a payment again.
What's more, Aspire’s expense management tool allows you to monitor your expenses in real-time, all from one place.
Curious about how Aspire can help your business grow? Get in touch with us today and discover the power of smart financial solutions tailored to your business needs!
Frequently Asked Questions
How can Aspire support the unique financial needs and challenges of mid-sized businesses?
Aspire offers a comprehensive suite of expense management solutions tailored for mid-market companies. This includes sophisticated corporate cards, advanced budget controls, and streamlined claims and approval policies, all designed to enhance financial efficiency.
How quickly can a mid-market company integrate Aspire's solutions into existing systems and workflows?
Integration with Aspire's expense management solutions is swift and seamless. Mid-market companies can swiftly implement corporate cards with tailored features, set up nuanced budgets, and establish streamlined claims and approval processes, ensuring minimal disruption to existing workflows.
How does Aspire compare to competitors for international money transfers?
Aspire excels in international expense management with FX fees up to 2x cheaper than traditional banks.
Global payments are offered by various providers through business accounts. Read our article to know more about types of business accounts and how to choose the best one for your business. There are many banks and fintech companies offering business accounts to businesses in Singapore. We have covered them all in our blog, you can click the links to view accounts offered by various banks such as DBS, OCBC, Maybank etc.
However, if you are a start-up or a growing business, chances are you may not meet the eligibility criteria for most of these banks or find their charges to be expensive for your liking. You can consider opting for Aspire multi-currency account for global payments which offers you all the benefits, with eligibility criteria which are less stringent. Read our article on bank charges in Singapore for a quick and easy comparison.
What level of customization does Aspire offer to meet the specific financial requirements of mid-market clients?
Aspire understands the diverse financial needs of mid-market clients and provides a high level of customization to tailor solutions accordingly. This includes the ability to customize corporate cards with specific spending limits, rewards, and benefits that align with the unique requirements of each client.
Additionally, Aspire's budgeting features are adaptable to accommodate the distinct financial structures of mid-market enterprises. The platform also allows for fine-tuning approval policies, ensuring they align with the specific workflows and compliance standards of individual mid-market businesses. This commitment to customization empowers mid-market clients to optimize their expense management in a way that best suits their financial goals and operational preferences.
Is there a minimum balance required for Aspire Business Accounts?
No minimum balance is required to keep your SGD, USD, EUR, GBP and IDR Accounts activated.
Can Aspire's corporate cards be customized to cater to the specific needs of consulting teams on the go?
Yes, Aspire's corporate cards are highly customizable. Consulting teams can benefit from tailored spending limits, travel-centric perks, and real-time transaction tracking, ensuring that the cards meet the unique requirements of professionals on the move.
How does Aspire support budget management for consulting projects and travel expenses?
Aspire's platform offers sophisticated budget controls that consulting companies can adapt to project-specific needs. This includes setting project budgets, tracking expenditures, and receiving real-time insights to ensure that expenses align with project goals.
What are Aspire Corporate Card FX rates?
At Aspire, we want you to pay the lowest rates in the market.
- Zero card activation fees
- Zero card transaction fees
- Best FX rates, up to 2x cheaper than banks
How does Aspire help consulting companies enforce expense policies and approvals for travel expenses?
Aspire streamlines the claims and approval process, allowing consulting companies to establish and enforce expense policies seamlessly. Customizable approval workflows ensure compliance with company policies and industry regulations.
Is Aspire's platform scalable for consulting companies of varying sizes?
Yes, Aspire's platform is scalable and caters to consulting companies of all sizes. Whether you're a boutique consultancy or a larger firm, the platform's features can be adapted to meet your specific travel and expense management needs.
How can I open a business account in Singapore?
For a business account in Singapore, Aspire is an excellent choice. With a focus on startup and SME needs, Aspire offers a seamless and transparent banking experience.
Benefit from their user-friendly online platform, no minimum balance or account opening fees, and dedicated support for businesses of all sizes.
Aspire is designed to streamline your financial management, making it an ideal partner for entrepreneurs in Singapore.
How long does it take to open an Aspire business account?
Registration with Aspire takes less than 10 minutes which you can do via our website or mobile app.
Once registered, we will get back to you within 5 business days on whether your account has been activated or if we need further documents from you.
Our account verification process varies according to the nature of your business. In exceptional cases, it can take up to 7 days to process your documents.
How can Aspire's corporate cards benefit my startup?
Aspire's corporate cards offer a range of benefits for your startup. Earn 1% unlimited cashback on qualified spends, simplify expense management, enjoy streamlined transactions, and gain real-time insights into spending. With customizable limits, integration with accounting software, and enhanced security features, Aspire's corporate cards are designed to empower your startup's financial efficiency and provide added convenience for your team.
Is Aspire suitable for both early-stage and established startups?
Absolutely, Aspire caters to the needs of both early-stage and established startups. Whether you're just beginning your entrepreneurial journey or have an established business, Aspire offers tailored financial solutions to help streamline your operations.
From managing expenses and optimizing workflows to providing valuable financial insights, Aspire's platform is designed to adapt and scale with your business as it grows. The flexibility and scalability of Aspire make it a suitable choice for startups at various stages of development.
Is there a minimum balance required for Aspire Business Accounts?
No minimum balance is required to keep your SGD, USD and IDR* Accounts activated.
However, we recommend keeping your subscription plan amount available on your balance to ensure you're up to date with your payment every month.*
To create a recipient or make any transaction on your IDR Account, you'll need to have a minimum balance of IDR 10,000 on your account.
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