As a business owner, you typically need working capital to operate and grow. It’s a simple fact of business life. You need to make the most of every opportunity – whether it’s buying stock at the right time or making the right hire. And cash flow isn’t always readily available, which adds pressure to every business decision.
Most Australian companies rely on multiple facilities and various forms of business finance – including overdrafts – to solve their core working capital needs. Half of those facilities are some form of revolving debt, such as a line of credit or even a couple of credit cards. And because of their flexibility, overdrafts have become the second most popular form of business finance in Australia, after credit cards.
A typical bank overdraft allows businesses to access extra funds through a transaction account up to a previously approved overdraft limit, to cater for the timing mismatch between when payments are received and suppliers are paid.
Interest is only charged on the balance drawn (or “overdrawn” in this case). The natural cash flows of the business can reduce the amount of interest charged compared to term loans which can’t be adjusted to match cash flows and may incorporate early repayment penalties.
Despite being such a common source of day-to-day business funding, the humble overdraft has not experienced a great deal of innovation since it was invented almost 300 years ago.
But fortunately, that is now changing.
First and foremost, and almost by definition, traditional bank overdrafts are linked to an existing bank transaction account. In a way, they are part of a captive strategy designed to enable cross-selling of other high-margin bank products. Bank credit requirements can still be onerous, restrictive and time-consuming. There tends to be a heavy reliance on property security and annual reviews, all subject to lengthy approval processes. And the minimum overdraft limits are often quite high and inconsistent with the needs of typical small and medium size businesses.
To solve these problems, GetCapital developed a Business Overdraft that combines the ease and flexibility of traditional overdraft but with greater control and versatility for everyday business needs.
Access to bank data and cash flow analysis enables real-time, continuous assessments on the true strength of your business, not backward-looking financial statements. There is no emphasis on property security or cumbersome annual credit reviews.
Best of all, you can link a GetCapital Business Overdraft to any business transaction bank account, bringing all your accounts together in one place. So, you don’t need to change banks or set up new accounts – saving you time and effort.
As a business, you finally have greater access and control over your bank transaction data and more choice over how you finance your working capital –making your business less dependent on a single relationship. GetCapital’s Bank Connect makes it possible to “unbundle” services from a single financial services provider and link one or more business transaction accounts from any number of providers. Most businesses find it very useful to have access to a ‘just in case’ overdraft limit as a cash flow buffer. We can even work with you to help optimise your cash flow – for example, when your
payment cycles peak, an overdraft may be the right facility to avoid late fees or damaging supplier relationships.
As well removing some cash flow worries, the Business Overdraft has a robust level of security built in. The bank connection is read-only access, bank account details or passwords cannot be stored or viewed, and all information is encrypted. No one can move money into or out of your accounts other than you and your authorised parties.
GetCapital Online gives you 24/7 access to everything you need – from your loan agreement and payment limits to full visibility of all your bank accounts. So, if you need to top up your transaction account on payday, you can transfer funds and transact in a just a few clicks.
Best of all, you can use your overdraft for just about any business purpose. You can run at zero balance and have it ready for a rainy day, just paying the low annual fee with no interest. Or you can access $25,000 to cover monthly payment spikes, up to $500,000 if necessary.
And that’s the point: you use what you need, when you need it and pay it back according to a comfortable amortisation and repayment schedule. It’s a Business Overdraft designed for the way smarter businesses operate today.
 ABA; The small business sector in Australia, Economic Report 2016