Business studies- overdraft

What are the disadvantages of an overdraft?

Interest Can be expensive if used on long term.

What are the advantages of an overdraft?

It is a good way to cover the period of money going in and out of a business. -it is easy to arrange. -it is cheaper than a bank loan if used on short term- can be free if arranged.

What are example that an overdraft is used for?

It is used in working Capitol . And is used for wages and electricity bills.

What is an overdraft?

This is a short term source of finance and it is also an extended source. This is where the businesses take out more money than is in there account as soon as your next pay is put into the bank the money overdrawn is taken out of your account. This means that they can still write checks even if they do not have the money in their account.