{"id":7703,"date":"2023-03-30T09:29:15","date_gmt":"2023-03-30T09:29:15","guid":{"rendered":"https:\/\/www.boozt24.com\/?p=7703"},"modified":"2024-07-05T14:21:32","modified_gmt":"2024-07-05T14:21:32","slug":"current-account-credit","status":"publish","type":"post","link":"https:\/\/www.boozt24.com\/en\/blog\/rekening-courant-krediet\/","title":{"rendered":"Everything you need to know about your credit account: Definition, pros and cons and how it works"},"content":{"rendered":"
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As an entrepreneur, you may temporarily need extra financial space to keep your business activities running or to expand. An option for this is a current account credit, but what exactly does this mean and how does it work? We take a closer look at the concept of overdraft credit and discuss the advantages and disadvantages of this financing option.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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What is a current account credit?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tA current account credit is a credit form made available by a bank to a company. It is a flexible form of credit where the company is free to withdraw and repay money within a certain credit limit. It is a useful tool for creating temporary extra financial space for the company.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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When is overdrafting interesting?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Overdrafting can be interesting when the company needs temporary extra financial space. For example, if there are unexpected costs or if there is a period in which there are less revenues than usual. Overdrafting can be a solution in such cases because it is quickly and easily available and there is no hassle applying for a loan.<\/p>

Especially companies that have to deal with large fluctuations in their financing needs often use a current account credit. There are numerous situations in which overdrafting can be interesting. We provide some examples below:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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1.\tPre-financing of projects:<\/strong><\/span>\u00a0Companies that deal with projects that require a lot of pre-financing, such as building a house or developing a new product, can benefit from a current account credit. The company can then borrow the necessary money to start the project and repay the credit later from the project's revenues.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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2. Overbrugging van openstaande facturen: <\/strong><\/span>Companies that deal with projects that require a lot of pre-financing, such as building a house or developing a new product, can benefit from a current account credit. The company can then borrow the necessary money to start the project and repay the credit later from the project's revenues.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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3.\tHiring personnel:\u00a0<\/strong><\/span>Hiring personnel can entail high costs, such as salaries and social contributions before the new hire starts to generate turnover. By using a current account credit, these costs can be paid until the company has enough turnover to pay the costs from the revenues.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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4.\tSeasonal industry:<\/span> <\/strong>Companies that deal with seasonal work or sell seasonal items, such as a travel agency or an ice cream parlor, often have highs and lows in their turnover. A current account credit can then help to cover the costs during the quieter periods and repay the credit later from the revenues of the busy periods.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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5.\tInventory purchase:<\/strong><\/span> Companies that have to purchase inventory for sale, such as a wholesaler or a supermarket, often face high costs that have to be paid in advance. By using a current account credit, these companies can purchase the inventory on time.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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6.\tBusiness investment:<\/span>\u00a0<\/strong>If a company wants to make a large investment, for example in new machines or equipment, a current account credit can be a solution. The company can then make the necessary investment and repay the credit later from the revenues of the investment.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How does it work?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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A current account credit works as follows: the bank makes a certain credit limit available to the company. This is the maximum amount that can be withdrawn. The withdrawn amount is then settled with the current account. You only pay interest on the withdrawn amount, not on the total credit limit. An application for a current account credit is assessed in the same way as an application for a loan. It is important that you meet a number of conditions.<\/p>

When applying for a current account credit, the bank will assess the company on the following:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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