Overdraft facility (kassekreditt)

Kassekreditt is the Norwegian form of overdraft facility: a type of flexible short-term financing that lets businesses draw beyond the balance on their business account, up to an agreed limit, in order to cover running expenses or unforeseen cash needs. It works as an overdraft facility in which the business pays interest only on the amount actually drawn. Kassekreditt gives businesses the financial agility they need to handle fluctuations in cash flow, secure liquidity and maintain steady operations.

How does kassekreditt work?

A business enters into an agreement with a bank for an overdraft limit based on the business's financial health and needs. Once the agreement is in place, the business can freely draw up to the agreed amount on its account. Interest is calculated daily based on the amount actually used, and the business can settle the debt at any time in order to reduce interest costs.

Why does kassekreditt matter?

• Liquidity management: An overdraft facility helps businesses handle periods of varying cash flow, so that they can carry on paying wages, trade payables and other operating costs even when income is low.
• Financial flexibility: It gives immediate access to additional funds, which allows businesses to take advantage of unexpected opportunities or handle short-term financial challenges.
• Effective cost management: Since interest is calculated only on the amount drawn, an overdraft facility can be a more cost-effective solution for short-term financing than a traditional loan.

Important points to consider with kassekreditt

• Interest and fees: It is important to understand the total costs attached to the overdraft facility, including interest rates and any fees, in order to make sure it is a cost-effective solution for the business.
• Credit limit: The size of the overdraft facility should reflect the business's actual short-term financing needs and its ability to service the debt.
• Terms and conditions: The details of the overdraft agreement, including how and when interest is calculated and paid, should be considered carefully in order to avoid unforeseen costs.