Study notes

Managing cash flow - bank overdraft v bank loan

One of the key issues in cash flow management is ensuring that a business has the right kind of bank finance. The essential choice is between a bank overdraft and a bank loan.

Banks are the traditional "port of call" for businesses with cash flow problems. However, the banking crisis and related economic downturn between 2007 and 2012 made many banks more nervous about lending to businesses.

Assuming that bank finance is available, which one should a business go for?

Here is a summary of the key considerations:

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