Doing Business in Greater Phoenix, U.S.A. - Chapter 9: Banking



Unlike banks in many countries, U.S. banks are not government-owned and managed. They provide deposit facilities for the general public, provide loans for businesses and individuals, and perform various financial services. The only major governmental banks that actively participate in the banking system are the 12 Federal Reserve banks, which function as a central bank and have policies determined by the Board of Governors of the Federal Reserve System.

The U.S. banking system can be classified into two broad groups: Commercial banks and thrift institutions. Commercial Banks are oriented primarily to commercial activity with corporate customers, although they do provide services to individuals. Thrift institutions traditionally have had a primary function of encouraging personal savings and home buying through mortgage lending, though their activities have expanded beyond this.

Commercial Banks

Commercial banking in the United States operates under a dual regulatory system. A commercial bank can be either federally chartered by the Comptroller of the Currency as a national bank or chartered by the state in which it will operate as a state bank. In either case, the bank is owned by its shareholders. Examples of large commercial banks include Citigroup, Bank of America and JPMorgan Chase & Co. National banks must be members of the Federal Reserve System.

State banks are regulated by state authorities. They may elect, but are not required, to join the Federal Reserve System. National banks must have their deposits insured by the Bank Insurance Fund (BIF), which is managed by the Federal Deposit Insurance Corporation (FDIC). State banks may have their deposits insured by the state or by the BIF. Certain capital requirements are imposed. All depository institutions, including national banks, must maintain a reserve of a certain percentage of deposits, (determined by the Federal Reserve) with the Federal Reserve Bank of their district. Restrictions on the maximum rate of interest commercial banks can pay have been removed.

To attract corporations as their main customers, commercial banks generally specialize in accepting corporate demand and time deposits and making commercial loans. They also attract retail banking business by accepting savings and demand deposits and making consumer, mortgage and small business loans. Commercial banks often have departments that make international loans and deal in letters of credit and collections. Large commercial banks are likely to be dealers in foreign exchange and may provide trust.

Thrift Institutions

Thrift institutions, traditionally oriented to the local community and individual consumers, take a wide variety of forms such as mutual savings banks and savings and loan associations. The distinctions between them are increasingly more of historical significance than of practical effect. Thrifts may be owned either by shareholders or by their depositors. They can be chartered by a state or by the federal Office of Thrift Supervision. Federally chartered thrifts must have their deposits insured by the Savings Association Insurance Fund (SAIF), which merged in 2006 with the BIF, managed by the FDIC. State-chartered thrifts may have their deposits insured by the state or by the SAIF.


In order to establish a bank account in the Unites States, you must disclose some general information. In order to comply with the United States Patriot Act, banks in the United States are required to gather information that allows them to sufficiently identify their customers. General information that a bank most likely will require includes:

Entity Information Needed

  • Client’s legal name
  • Doing business as (DBA) name if applicable
  • Legal entity type
  • Physical and mailing address
  • Tax ID
  • State of organization and year established
  • Country of primary domicile (parent headquarters) and country of primary business (revenues)
  • Country of nationality and country of assets

Equity Ownership:

  • If Public: Exchange country, exchange, symbol
  • 100 percent wholly owned subsidiary?

Annual Revenue:

  • Revenue type
  • Source of capital

Individual Information and Ownership Information Generally Needed

Primary Contact Information:

  • Name
  • Email
  • Phone
  • Fax

Authorized Account Signers:

  • Name(s)
  • Title
  • Phone
  • Email

Ownership Information (Needed for both Direct and Indirect Beneficial Owners):

  • Principal type (Individual or non-individual)
  • Principal name (Indirect or direct)

Cash Management Needs and Activity

Details of Cash Activity:

  • Volume and amount of cash deposits and how it relates to business
  • Volume and amount of cash withdrawals and how it relates to business

ACH (Automated Clearing House) Activity:

  • Volume and amount of ACH transactions and how it relates to business
  • International activity and countries where ACH transaction will be sent

International Wire Activity:

  • Volume and amount of international wire transactions and how it relates to business
  • International activity and countries where wire transactions will be sent

Documentation Needed

Articles of Incorporation

Form W-9: Request for Taxpayer Identification Number and Certification


Cash management in the Unites States involves all the products and services that a bank offers in order to allow for the collection, handling and usage of cash in any organization. A Demand Deposit account, or checking account, is usually the center of cash management services, and then various products or services are offered in addition, depending on the needs of the organization or individual. Cash management also comprises the movement of money domestically and overseas through the use of electronic funds transfers.

Cash Management

  • Traditional and Electronic Account Services
    • Payables and receivables
    • Lockbox services
    • Check image capture
    • Desktop image scanning
    • Account reconciliation
  • Foreign Exchange
    • Spot and hedging solutions
    • Desk and online platforms to initiate trades
  • Liquidity
    • Solutions to maximize value of operating cash
    • Solutions for increasing yields on reserve cash
  • Commercial Cards
    • Minimize purchase order, invoicing and vendor payment costs
    • Identify cost-saving opportunities
    • Leverage online reporting capabilities
    • Manage budgets effectively

Electronic Funds Transfers

There are forms of electronic transfer that are distinct from a wire transfer. Electronic funds transfer (EFT) system is one such system. This is the system you may use when you give your bank account number and routing information to someone owed money, and that party will transfer money from your account. EFT is also the system used in some payments made via a bank’s online bill payment service. EFT transfers differ from wire transfers in important legal ways; an EFT payment is essentially an electronic personal check, whereas a wire transfer is more like an electronic cashier’s check.

In the United States, such EFT transfers are often called “ACH transfers,” because they take place through the Automated Clearing House.

One important way ACH transfers differ from wire transfer is that the recipient can initiate it the transaction. There are restrictions to this, of course, but this is the way people set up automatic bill payments with, for example, utility companies.


A wide variety of credit solutions are available from financial services providers. Below are some common examples:

Lines of Credit

A line of credit can help provide a flexible source to fund working capital. Lines of credit are typically repaid from your business’s operating cash flow (i.e., the collection of receivables) and can either be revolving and non-revolving lines of credit:

  • A revolving line of credit lets your business borrow, repay and borrow again up to the original amount committed by the lender throughout the life of the loan.
  • A non-revolving line of credit lets your business borrow an amount either in a lump sum or an amount disbursed over a period of time. Each time repayment is made, credit availability increases by that amount.

You can use a line of credit to:

  • Fund seasonal changes in inventory and receivables.
  • Take advantage of vendor discounts.
  • Meet unexpected cash needs.

Term Loans

Term loans are a lump-sum disbursement with payback over a specified period of time. They may be used to finance equipment or for a change in ownership, a new business acquisition or other long-term needs of your company.

A term loan can help you:

  • Strengthen your competitive position by obtaining the equipment and assets you need to grow or operate more competitively.
  • Increase your working capital to help your rapidly growing business.
  • Maximize profitability through a properly structured term loan where the repayment schedule matches the cash flow available to repay debt.

Asset-Based Financing

Asset-based lending can help your company leverage the value of its assets to meet its financing needs. Through specialized monitoring of credit and collateral, loans may be available to you that are normally outside of the typical lending criteria of most traditional financing relationships, and this can provide your company greater credit availability and more flexibility in pursuing your goals. Financing structures can include term loans and revolving lines of credit.

Trade Financing

Trade Finance is funding provided to buyers or sellers during the course of a transaction for the purposes of improving working capital and cash flow. Financial institutions provide funds in the form of loans or discounts at an advance rate that is a percentage (up to 100 percent) of the value of the transaction and an interest rate that reflects an assessment of the risk of repayment and the funder’s ability to secure an interest in the transaction collateral.

Letters of Credit (L/C): You can improve cash flow in the U.S. or other country by using import, export, standby or prepaid letters of credit.

Documentary Collections: Expedite international trade processing and reduce sales and transfer costs of funds and goods. Short-Term Export Financing: Increase the credit available for short-term export financing in your asset-based credit line by including uninsured foreign accounts receivable in the borrowing base.

Medium-Term Export Financing: If you are a U.S. exporter, you can offer overseas customers attractive loan terms and significantly reduce non-payment risks. This export financing covers most non-project-related loans for capital equipment exports.

Export-Import (Ex-Im) Bank Working Capital Guarantee Program: Accelerate overseas sales payments for your export business. Get international trade financing on your foreign accounts receivables or inventory, including work in progress. This pre-export working capital financing program is offered through the Export-Import Bank of the United States.

A variety of other credit facilities are available, including business credit cards and loans offered in conjunction through the Small Business Administration; equipment finance; real estate finance; bankers’ acceptances; and sophisticated capital markets solutions.


A multitude of services are available to help companies in the U.S. make payments to suppliers or transfer funds to affiliates in other countries. The choice of transfer method often depends on the urgency of the payment, the relationship between the parties and the country where the recipient is located.

Wire Transfers: Wire transfers can be made to most countries around the world and can ensure timely delivery and certainty of payment. Transfers can be made from a bank or from a variety of online services. This is often the fastest and safest way to transmit money around the world for one-time or repetitive overseas payments.

Global ACH: To facilitate bulk payments, increase control over cash flow and reduce the cost of moving funds, ACH can be an attractive alternative. Payments are processed and received by the beneficiary in local currency; settlement time varies between one and four days, depending on the country.

Foreign Currency Drafts: A foreign bank draft is a check denominated in a foreign currency that is drawn against funds deposited in a foreign bank. You can initiate a paper draft denominated in a foreign currency issued from a multicurrency or U.S. dollar account. These drafts clear locally in the beneficiary’s home country and can be printed from the U.S. or beneficiaries can print them locally. International Request for Transfer (IRFT): This service provides you with the ability to initiate wire transfers from your financial accounts held with foreign banks around the world. The service is commonly referred to as SWIFT MT101, and it also allows you to repatriate funds to a U.S. dollar or multicurrency account.

Global Remittances: Primarily used by consumers, global remittances allow you to transfer funds to recipients in another country where they can either receive the funds at designated locations or have money deposited into an account at the receiving institution. You can send cash or send funds from your U.S. bank account with a global remittance.

This Guide – Doing Business in Greater Phoenix, U.S.A. – can be downloaded at

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