Is this the way to get a Decent Credit Rating or Overdraft?
It’s a funny old world at the moment, overdrafts with pubs or any sort of property development are a dirty word as far as Banks are concerned.
We had for a number of years a standing overdraft of £25K, which we never ever used, it was there as a safety factor if any sort of money transaction was held up.
The bank cancelled it because we didn’t use it, I said well give us a £5K overdraft for any glitches, they said “NO”, because there was not enough activity on our account, we had a few properties which we were trying to decide what to do with them, we had stopped running pubs some years before which always gave an impressive cash flow through the bank.
We had a substantial amount of money with a stockbroker, buying and selling shares, the money staying in the stockbrokers account and I naively assumed that this was sufficient security, not on your life, it was not even considered by the bank as any form of security against an overdraft.
The inevitable happened a payment to the bank went elsewhere for the everyday expenses, I was away and the bank bounced about five cheques, causing me complete mayhem.
The Manager stood there with nasty smirk, saying it was my fault, knowing that it was a monthly transfer from the Stockbrokers.
You can’t get an Overdraft, the Bank Manager is a very nasty unmentionable, and you have absolutely no way of getting round it.
Banks are only happy if you are feeding money in and out of your account or have a large deposit account, which we used to do when interest rates were high.
Maybe I am being very naïve, after studying my annual summaries of my account.
When we had a lot of spare money and it was invested, there was minimal quantifiable money being paid into the account, in bank terms insufficient activity and no overdraft, the other option a large amount of money being paid in and a large amount of money being paid out, the overall total paid in was substantial, but the amount of actual money used could be minimal .
To my simple mind, the obvious thing to do is have two Bank Accounts, which I always have business wise, take for example a sum like £5K, which you pay in every week and withdraw in smaller quantities and pay into the second account, you then pay the £5K back into the other account at the start of the next week and keep repeating the exercise, every week or every month.
It will quickly show substantial activity on your account for a relative small amount of money, real profitability does not seem to be considered.
Don’t keep the figures exactly the same, vary them and make sure your accountant is informed of what you are doing, if it works and you get your overdraft the banking system is not fool proof.
It will at the end of the year show a decent throughput of cash, I had a similar con played on me to enhance the value of a Freehouse and the Accountants missed it, the same amount of extra money was being fed into the till every week and withdrawn with some other tricks to raise the turnover and the freehold value.
A useful tip is, you have one account for your PDQ machine and another account for trading with a different bank, transfer the PDQ money regularly into the other account, both will show considerable activity.
Barfly
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