A repo is a facility that can be part of a company`s current account. Overdrafts are a short-term solution to financial stability issues and eligibility criteria vary slightly from bank to bank. The only thing that remains the same for everyone is that you need to have an existing checking account at the bank you are going to for a repo. An overdraft or revolving credit facility can also be useful. Both are types of working capital financing and have some similarities, such as.B. the interest received on the amount that has been withdrawn if it has not yet been paid. In addition, they are not interchangeable and have their own unique features and advantages. If you can`t honor your current credit repayments or are at risk of exceeding your overdraft limit, talk to your bank and try to reach an agreement. For example, the bank may allow you to repay what you owe over a longer period of time. If you are able to do this, it is usually easier to work directly with your own subsidiary than with a central collection unit. If you are able to reduce the balance to the overdraft limit, it can reduce the cost of credit. Depending on conditions and interest rates, commercial overdrafts can be a good way to borrow money.
But not universal. Before you commit, it`s important to evaluate why you need the credit facility, what it will cost, and whether you can get a better deal elsewhere. 4 If you have authorized the transfer of a current account and participate in the overdraft program, the funds from the current account you have selected will be used first to cover the overdraft. .