Rebuild your working capital

Use your overdraft carefully and analyse how you use it every year, i.e. the average time your account balance is in credit and in debit.

The balance of your account fluctuates as part of your normal pattern of use. There's a problem, however, if you use your overdraft all the time or even exceed it. This kind of situation can highlight a shortage of funds or a need for long-term financing, which might be more appropriately met by another form of lending.

 

Make a distinction between your ongoing and temporary needs. Your overdraft is the first item you should pay off when your cash flow improves. There are better borrowing options to finance your ongoing need for working capital. An instalment loan or investment credit are two examples of appropriate ways of rebuilding your working capital.

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Instalment loan

Stagger the cost of payments for goods over time whilst taking immediate advantage of your investments.

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Investment credit

Finance major planned investments. Borrow a set amount for a fixed period and pay it all back according to an agreed schedule.

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