Question

State one point of difference between Cash Credit and Overdraft.

State any difference between cash credit and overdraft.

State one difference between cash credit and overdraft.

Distinguish between:

Cash credit and overdraft.

Answer 1

Basis of Distinction	Cash Credit	Overdraft
Purpose:	Businesses primarily use it to meet working capital requirements.	Individuals and corporations typically use it to bridge short-term cash flow shortfalls.
Limit:	A predetermined limit is established depending on the borrower's inventory and receivables.	A limit is established based on the creditworthiness of the account holder and is typically tied to a current account.

Answer 2

	Basis of Distinction	Cash Credit	Overdraft
1.	Eligibility	Persons/organisations not holding current accounts are eligible for cash credit.	Only current account holders are eligible for overdrafts.
2.	Nature	A revolving credit arrangement.	Not a revolving credit arrangement.
3.	Period	A longer period.	For a few days.