The bank credit account limit, a real advantage for your business

What is the credit account limit?

It is a negative limit on an active commercial bank account. A framework agreement is issued for a defined amount and without a set repayment period. The inflows (payments from your customers) will offset the use of the loan. As a rule, a company will use its limit to the maximum because there are no repayment terms. It is also possible to take out a fixed advancement in addition to this loan. The amounts can vary between CHF 100,000 and CHF 500,000 depending on the size of the company and its needs, higher amounts on request.

Your limit is not a constant

Of course, each year, the bank evaluates and adapts the limit if necessary, according to the company’s performance (results / growth / investments etc.).
This credit allows you to finance your company’s operating capital and manage your cash flow so that your liquidity is not affected. In addition, thanks to the credit account limit, you can take advantage of discounts from your vendors by paying in advance. This will make you more competitive.

Implementation

The type of credit used for this form of financing is working capital credit (operating credit).
As a rule, a company will use its operating credit for the purpose of making urgent acquisitions, temporarily guaranteeing liquidity, compensating for fluctuations in turnover or developing new products.

The following advantages should be taken into account:

  • Limit can be used at any time, without prior notice
  • A framework agreement tailored to your needs
  • The limit can be issued in several currencies
  • Intended for the long term
  • Possibility to adjust your limit upwards

Ask for advising

As far as the financial burden is concerned, you will only pay interest on the average used during the defined period (as a rule, the financial institution closes the current accounts every quarter). In addition, a quarterly finance charge of 0.25% is also calculated on the highest debit balance of the quarter.