overdraft

(noun)

The act of overdrawing a bank account.

Examples of overdraft in the following topics:

  • Commercial Banks

    • Commercial banks engage in the following activities: the processing of payments; accepting money on term deposit; lending money by overdraft, installment loan, or other means; providing documentary and standby letters of credit guarantees, performance bonds, securities underwriting commitments and other forms of off- balance sheet exposures; and the safekeeping of documents and other items in safe deposit boxes.
    • An overdraft is an example of an unsecured loan.
    • An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.
    • If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate.

  • Short-Term Loans

    • Overdraft protection is a financial service offered by banking institutions in the United States.
    • An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.
    • In this situation, the account is said to be "overdrawn. " If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate.

  • Identifying Varying Conditions

    • The inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring. "

  • Credit Operations

    • A line of credit may take several forms, such as overdraft protection, demand loan, special purpose, export packing credit, term loan, discounting, purchase of commercial bills, traditional revolving credit card account, etc.

  • Working Capital

    • Short-term financing requires identifying the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft).

  • Electronic Banking

  • Limitations of the Statement of Cash Flows

    • Bank borrowings (overdraft) in certain countries can be included in cash equivalents under the IAS 7.