Payment Methods And Bank Balance Flashcards
What balance will the business bank account normally have?
Either positive (credit balance) or negative (debit balance)
What is an overdraft?
An overdraft is a bank current account which is authorized by the bank to have a negative balance which will provide short term financing to a business
Who authorizes the limit on a business overdraft?
The bank
What charges will the business have to pay in association to an overdraft?
When the overdraft is set up or renewed.
Also when the business goes overdrawn
How can a business minimize the cost associated with a bank?
Paying all payments into the bank promptly
What payment method is deducted out of the bank account on the same day?
Cash Bank draft CHAPS payment Faster payment BACS (standing order- taking into account 3 days to set it up) Cheques (if cashed from the same branch
What payment method is processed the next working day?
Debit card
What payment method is deducted from the account the following month?
Credit card
Define credit account
A basic account into which money can be paid and from which payments can be made
Define debit balance
A negative balance on a bank account; in effect the account holder is borrowing and owes the bank money
Define credit balance
A positive balance on a bank account; in effect the bank owes the account holder money
Define overdraft
An arrangement with a bank to allow short term borrowing (a debit balance) on a current account
Define overdraft limit
The maximum amount which a bank will allow a customer to borrow on an overdraft
Define same day deduction
The situation where a payment made by a business is deducted from the bank account on the same day
