Overdraft or loan

[Dave A]

This is were I believe many small contractors fail, we get busy, lots of work comes our way, we grab it with both hands and "trust" people.

If you end up on a big project where you've got a client owing you more than 10% of your book, I reckon the short answer is make sure you get deposits and progress payments.

Otherwise, as you say, you really are exposed. And it's probably only a matter of time before you get taken for a ride.

[ians]

Dave you been quiet. Just got back from a trip to an exotic island, spend all the deposit money collected 😜

[Dave A]

You cannot believe what my life has been like the last couple of weeks...
Hectic doesn't begin to describe it.
Good hectic, mind you. Lots of good things happening.

But hectic nonetheless.

[ians]

That's good news. I just want to get my ducks in a row with my little operations because I believe things are gona get busy soon, going commercial with my hobbies. If all goes well I could be learning to program a CNC soon.

[flaker]

Ian, Good luck mate on the venture. Just pity us idiots who don't even know what CNC is

[ians]

"Computer numerical control"

[BusFact]

Not sure whether I should have posted this in a banking charges thread or here. Chose here instead as it may affect someone considering an overdraft:

In the space of one month I received the following fees for running a small company overdraft:

1) Interest on the portion of the facility which I used.
2) A charge for the portion which I didn't use.
3) An annual charge of R2000 to review my facility ( perhaps it took a team of 10 people to do this ??? and no, its not something I requested nor is there a change in the facility)
4) A R44 charge to pay themselves for the facility review fee (cherry on the top)

My issue with the banks is not normally their fees, it tends to be their lending practices, but this one took me a bit by surprise.

[Justloadit]

Not sure whether I should have posted this in a banking charges thread or here. Chose here instead as it may affect someone considering an overdraft:

In the space of one month I received the following fees for running a small company overdraft:

1) Interest on the portion of the facility which I used.
2) A charge for the portion which I didn't use.
3) An annual charge of R2000 to review my facility ( perhaps it took a team of 10 people to do this ??? and no, its not something I requested nor is there a change in the facility)
4) A R44 charge to pay themselves for the facility review fee (cherry on the top)

My issue with the banks is not normally their fees, it tends to be their lending practices, but this one took me a bit by surprise.

You must be referring to Stranded bank.

With FNB there is a yearly review, in my case because of the amount it is R4000.00, however the manager comes and visits, and brings the paper work for me to sign and accept the terms and conditions. Every time I read the terms and conditions before I sign, and always check under the surety side of it. It states the amount of the over draft only, nothing else, and for the exact amount I have requested.

I had opted for an overdraft rather than a loan, simply because of the business model. Although the model has changed, but I simply took the cost of the overdraft as an expense to facilitate the business, and in the grand scheme of things, which was about turning money over on a daily basis with a very small margin, but accumulative over the month to be approximately 35% of the over draft amount. The cost of the overdraft in my case was less than 10% of my gross profit.

Before choosing, ensure that you are taking it for the right reasons.

[Dave A]

3) An annual charge of R2000 to review my facility ( perhaps it took a team of 10 people to do this ??? and no, its not something I requested nor is there a change in the facility)

Which bank?
I certainly haven't been hit with this one
(Yet?)

[BusFact]

Standard. I get it annually, although I don't remember it being so high. Will investigate further.