Bank Overdrafts
- Created by: TAJ256
- Created on: 03-02-23 13:39
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- Bank Overdrafts
- What is it
- Where a bank agrees that money can be burrowed by the business up to an agreed limit as and where requiredled
- An external short term source of finance
- Evaluation
- Pros
- Good if the business doesn't receive customers payment quick enough
- If there is a large delivery that needs to be paid for
- Cons
- Carries high interest rates
- The bank can call in the overdraft at any time and force the business to pay it back, in extreme cases this can cause business failure
- Pros
- Who provides these?
- Banks
- Who is this suitable?
- Any company including unoncorporated companies
- Factors affecting the choice of this source of finance
- A business would use it if cash flow was poor
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- What is it
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