The dos and don’ts of business banking in France

The French banking system can sometimes seem like a foreign and frosty place for international entrepreneurs. But if you know exactly what the banks are looking for in a business customer, then you’ve practically got your account signed and sealed. We give you the inside information from a banking expert on how to go about setting up your business bank account in France.

Clarity

Before you even think about stepping into a French bank, you’ll need to consider your business plan. Your business may already be up and running in your home country but you’ll need to write out exactly what that business is and how much money you intend to make in France before the banks will allow you to trade in the country.

Even if you show up with a pile of documents showing healthy accounts and glowing client testimonials, a French banker will not open a business bank account without a full and detailed description of your business translated into French.

That means no vague visions of what you hope your business will be sometime in the distant future. They want to know EXACTLY how you’re going to be bringing the money in the moment your account is open and WHY you want to do business in France. Areas to consider in the business plan are:

  • Suppliers
  • Employees
  • Potential customers
  • Logistics & Chain of Command
  • Offices or Domains

Clarity is what the banks are looking for. If they are unclear on any point of your business, they will not give the go-ahead to issue your business debit cards and cheque books so it’s worth investing some serious time on constructing a perfectly worded business plan that shows your venture in its best light.

Transparency

Since the tragedy of 9/11, the world’s banking system has become much stricter and more bureaucratic in order to safeguard against the funding of terrorism. Luckily in France, their banking system was already fairly rigid compared to other European countries but the Basel Regulation has now made it compulsory for all banks to disclose their full assets making transparency the order of the day.

So if the banks are obliged to be transparent that goes double for their customers. Anyone opening a French bank account needs to detail exactly who the people are behind the business. Banks do not like seeing a web of anonymous holding accounts and faceless offshore companies on the spreadsheets. They want to know who the owners are and where the money is coming from. If there’s even a whiff of secrecy or dodginess, the bank’s shutters will slam firmly down.

This applies to loans as well. A bank will not lend you any money for your business, until it has carried out a full investigation of all your capital and assets and is satisfied you’ll be able to pay the loan back with interest.

Sales

There was a time when French banks were happy to open a business account for those who had a decent business plan and all the right documents. But after the recession hit in 2008, they found themselves having to close the accounts for swathes of companies that went out of business.

Now the banks are reluctant to waste their time with opening accounts for entrepreneurs with ambitious business ideas that may have worked in other countries, only to have to close them a year later when it hasn’t panned out quite as expected in France. So now foreign entrepreneurs have to show they can make their business financially successful with French customers – and the French are quite particular in how they spend their money.

Banks are happy to open accounts for new, innovative ideas but they feel particularly comfortable with companies that deal in the more safe area of retail. Home decoration, heating systems, cheap goods such as clothing and accessories – these are all products that sell well in France but also have a quantifiable aspect to them that the French banks feel secure with. E-Commerce companies that trade on-line are also popular as overheads are low, so more profit is likely to go into the account.

Another cultural difference that you’ll need to bear in mind is that many French customers still love to pay by cheque. Unlike other countries where bank transfers and online credit card payments are the norm, many French customers like to do things the old fashioned way so provision needs to be made for the processing of cheques.

Language

French banks want to know they can communicate with their customers. That means being able to speak the same language. Most banks with international clients are able to deal with English speakers, but if there is any doubt it is always wise to have a French speaker to help translate documents or contracts.

If you don’t have a director or employee who speaks French, you can find help with the whole banking process through a company formation agent who can deal with banking introductions and accompany you to the bank if need be.

Share Capital

Despite the law having been changed to allow you to open a bank account with as little as €1, the likelihood of that happening is extremely slim.

The banks need to know that you’re serious about your business and that you have enough funds to cover things such as bank fees and government taxes, so a sum of at least 4000€ share capital is usually required to open a business account.

Another interesting fact about the French banking system that you may not know is that your share capital is made public and needs to be displayed on all documents bearing your logo – including letterheads and websites.This is displayed in the following fashion – (‘Name of Company’) au capital de (‘amount of euros’) enregistrée au Registre de Commerce de (‘French city where your company is incorporated’) sous le numéro (‘company registration number’).

So unless you want your company to look like a real cheap flash in the pan, you’re better off depositing as much share capital as you can.

After taking into account all the above requirements, you can be sure to have a smooth meeting with your French bank manager who will be more than happy to help start you off with the most important aspect of opening a company in France – your French business bank account.

This post was written by Katya Puyraud, Managing Partner at Euro Start Entreprises. We work with businesses and entrepreneurs providing company formation and incorporation services in France, UK, US & Emirates.

 

Simon OatesThe dos and don’ts of business banking in France

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