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  • #964338
    complete civil
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    I am looking for information on getting a overdraft account. I am only new in my own business so will this be a issue? My business turns over enough to cover wages and in total leaves a few hundred dollars profit every week and slowly growing. I need the overdraft to chase up larger jobs to increse my turnover.
    Thanks

    #1004871
    Burgo
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    Develop a BUSINESS PLAN then talk to a friendly bank. Also talk to an accountant who will walk you through a business plan and direct you to his friendly bank, as not ALL banks are friendly, greedy yes.

    #1004872
    complete civil
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    Thanks for that, do you suggest i wait until i have been in business at least 12 months?

    #1004873
    beanydc
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    It’s always better to talk to the accountant sooner rather than later. They’ll have plenty of advice and suggestions for you, including how to put things together for tax in a way that will save you accounting fees.

    To find one, talk to others in business, and see what they suggest.

    Denise Maffey CA PP (NZ)

    complete civil, post: 3882 wrote:
    Thanks for that, do you suggest i wait until i have been in business at least 12 months?
    #1004874
    toddo
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    Just a couple of things to think about. Firstly, getting overdraft in the current climate will be challenging without property security to back it up. Secondly if you are intent on going ahead, make sure you have a month by month cash flow for the next 12 months that shows exactly why you need it and how it will fluctuate between credit and debit.

    Also, having no knowledge of your actual business I can only suggest that you might consider something like Debtor Finance or Invoice Discounting as a finance option other than an overdraft. These facilities are much easier to arrange for a startup or new operating business and can be set up by financiers other than the major banks. This gives you a bit of choice of financier for a start but also you can apply for increases as your sales grow. ie. the limit is tied to the growth of sales and therefore the debtor book whereas an overdraft may well be limited by your property security.

    I realise that some people will say you can get an overdraft without property etc. but I can tell you that it will be a lot more difficult, particularly ‘in this current environment’.

    cheers

    #1004875
    LeelaCosgrove
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    Strange that you say that Todd … I’m having the opposite experience!

    I don’t have property … but my bank is contacting me constantly and offering me stuff … they want to give me credit cards, home loans, over drafts … perhaps because my business numbers have been looking quite healthy for the last couple of years and I don’t have much in terms of debts.

    Maybe that will change over the next few months – I don’t think Australia has really started to feel the hit of the downturn yet … but we probably will in the next few months …

    #1004876
    Past-Member
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    I know this is off-topic – but it’s nice to put a face to your name Leela! Thank you.

    For anyone else who doesn’t have a ‘face’, it really is nice to see ‘who we are talking to’.

    And, Complete Civil – definitely get a good accountant. He/she needs to know about the overdraft anyway, and a good accountant really is imperative to have with your busines.

    #1004877
    toddo
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    LeelaCosgrove, post: 4318 wrote:
    Strange that you say that Todd … I’m having the opposite experience!

    I don’t have property … but my bank is contacting me constantly and offering me stuff … they want to give me credit cards, home loans, over drafts … perhaps because my business numbers have been looking quite healthy for the last couple of years and I don’t have much in terms of debts.

    Maybe that will change over the next few months – I don’t think Australia has really started to feel the hit of the downturn yet … but we probably will in the next few months …

    Hi Leela,

    I understand that marketing departments make offers all the time. It is a different story when the credit department takes a look though. I’m not saying they are totally unavailable, but your situation is obviously different to the fellow posting.

    I am seeing a number of my clients getting hit by this at the moment. The effects range from downturns in business/sales to a lack of credit being available for equipment purchase and replacement which is preventing them from taking advantage of opportunities. Hardest hit at the moment is the development community followed closely by those wanting to buy a business.

    The amount of capital being requested as a contribution to these types of transactions has been turned on its head, up from around 30-40% 12 months ago to 60% now. I do think that perhaps its an overreaction by many of the banks and in fact they create a self-fulfilling prophecy. Restricting facilities/credit and increasing risk margins on existing business puts many under pressure. Combine this with a very hardline on valuations and you restrict businesses from moving forward, or may even contribute to their failure – which of course means you have to liquidate their property at lower prices – bringing overall values down…….

    I’m sorry for the long long post, but I’m not negative, just annoyed at the situation and want people (being the first poster) to know that there are alternatives if he gets a knock-back on the overdraft.

    cheers

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