BANK OVERDRAFTS
BANKS PROVIDE BANK OVERDRAFTS. THIS IS WHERE A BANK ALLOWS A FIRM TO OVERDRAW ITS ACCOUNT WITH IT EVENTHOUGH THE FIRM HAVE INSUFFICIENT FUNDS DEPOSITED IN THE ACCOUNT TO MEET THE WITHDRAWAL.
THE FIRM WILL BE REQUIRED TO MAINTAIN CURRENT ACCOUNT WITH THE BANK BEFORE IT CAN OBTAIN THIS FINANCING. A LIMIT WILL BE PLACED ON THIS FACILITY AND THE FIRM IS FREE TO OBTAIN AS MUCH OR AS LITTLE CASH WITHIN THE OVERDRAFT LIMIT. THE BANK CHARGES INTEREST ON THE ACCOUNT OVERDRAWN OUTSTANDING AT ANYONE TIME.
WATCH OUT FOR THE NEXT TOPICS ON SOURCES OF BUSINESS FINANCING INCLUDING BANK LOANS.
Saturday, January 23, 2010
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