The current account credit is one of the most widely used products in the field of commercial financing in Germany. Often very expensive – and many companies use it in such a way that costs are often too high.
What is the current account loan for?
The current account credit is often abbreviated as KK-Kredit and offers companies and traders a way to claim the business account in an agreed credit line. It resembles in its operation the disposition credit (colloquially known as Dispo) with private accounts: The bank, with which the account is led, permits the account holder to cover the account at short notice, for example, to be able to settle unplanned or out of the norm payments and To cushion liquidity bottlenecks. In addition, a credit line is agreed in which this granted overdraft moves.
For example, at the end of the month, employees’ salaries must be paid, but a customer’s payments for services rendered have not yet arrived on the company’s account. This gap can be bridged with a current account credit.
Use current account credit? Yes, but right!
A current account loan makes sense for companies, but should be used consciously and in the right way. Because: The KK loan is used for short-term bridging of liquidity peaks and is usually priced with a higher interest rate. Accordingly, this form of financing is too expensive for the company for medium-term or longer-term refinancing in use. If then the negotiated overdraft for the overdraft is overdrawn, without prior agreement, in most cases either automated redemptions or toleration by the financial provider will result in further high costs in the form of an overdraft commission.
Many companies use the current account credit incorrectly – and thus very costly.
The permanent use of the KK loan is expensive. However, those who use it in the short term, cushion only occurring peaks in the finances and repatriate in good time, benefit from a well-negotiated bank overdraft facility.
Of course, it makes sense in many cases, for the tips mentioned, to have a current account credit available. However, there are opportunities in modern corporate finance to relieve the current account credit and to refinance current assets as an alternative. The following alternatives help you to relieve the current account credit and thus operate more economically:
1. Working capital loans
The conditions for the current account credit can sometimes be very high due to the permanent availability. For entrepreneurs, it is advisable to keep an eye on current assets and the current financial situation in order to cushion any medium-term gaps in a timely manner and to avoid overdraft, if possible. The classic working capital loan offers this, whose interest rates are usually lower than for the overdraft facility .
Here it is recommended to choose a fast available loan as well as flexible lenders. Most times the times of high capital requirements are foreseeable, but not always perfectly plannable. Even if, as an entrepreneur, through experience and market knowledge, you realize at an early stage that a bottleneck will soon be created, the time to prepare is limited. Appointment with the bank advisor, presentation of the situation, receipt of the offer of the bank, acceptance and payment – this takes valuable time. If it is too late then the company has to use the often more expensive current account credit. Digitally applicable corporate financing such as Digital MittelstandScredit can provide an optimal solution here: Fast liquidity for companies, easy to apply for and credit approval is possible within 24 hours.
Finetrading is an alternative form of financing in which the purchase of goods and materials by a financial service provider is pre-financed for the company. A purchase financing offers many advantages for the company, the principle is simple:
The entrepreneur agrees with a finetrader the conditions of the purchase of goods and then ordered, as usual, at his suppliers the required goods and resources. The invoice is settled immediately by the finetrader so that the supplier receives his money immediately. The entrepreneur only pays the open sum directly to the financial service provider after an agreed payment date, for example after 3 months, if the company was already able to exploit the goods themselves and generate revenue. With immediate payment, companies can not only benefit from discounts and discounts of suppliers, but also protect the overdraft facility, which is often used to finance short-term product purchases.
The granting of long payment terms, for example up to 3 months after delivery of goods, are part of the everyday life of many companies – and can endanger liquidity. Factoring is a form of financing in which a financial provider, the factor, buys the receivables of customers and settles them immediately. If necessary, the factor also assumes the default risk and receivables management of the receivables and thus relieves the company’s own bookkeeping and risk provisioning.
The company may continue to grant the customer an extended payment term, but has the funds directly available. Access to the current account to cover other costs or to accept further orders is avoided.
4. Guarantees and guarantees
More and more customers of craftsmen, builders or manufacturers demand guarantees for the service rendered or to be rendered. This may, for example, relate to warranty or contract fulfillment obligations. If there is damage to the manufactured good or can not be completed or delayed due to problems of the order, costs are incurred by the company.
If, for example, a damage or a failure leads to a warranty claim, it is usually necessary to react quickly. The current account credit is then usually the only solution – and that can be correspondingly expensive. A guarantee loan , previously concluded with appropriate foresight, is usually cheaper in case of damage and the working capital is spared.
5. Warehouse financing
A warehouse with goods that are held for sale or production is normal for many entrepreneurs, for example, to handle spontaneous orders and serve anyway. However, a warehouse also binds liquidity that could be better used elsewhere. Anyone who avoids a filled warehouse as an entrepreneur runs the risk of having to buy goods quickly when orders are high – the only way is usually overdraft credit.
Warehouse financing , a special financing , can save costs or provide additional budgets for more flexible goods purchases (for example, NOS projects). Here, interested companies should seek advice, as it is a special topic in financing circles.
Find the optimal financing now
Now find the optimal alternative to current account credit or compare the terms of your existing loan with the current situation on the market – and this on the basis of real offers from financial service providers: