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Issuing of cheques on regular basis from od

Kumar (Finance Manager) (82 Points)

03 April 2013

Dear Seniors & Experts,

Can we issue cheques on regular basis from Over Draft A/c insted of CA A/c ?

As far as my knowledge goes Over draft is a liability and always negitive balance. Hence kindly let me know whether we can issue cheques on regular basis from OD account insted of Current Account by transfering the funds from CA to OD Account.

as far as company is concerned is it good practice operating OD account insted of C.A account for day to day business transcations like ( Utalitiy payments, Vendorpayments etc) ?

Please guide me.

an early reply in this regard would be appreciated.

Thanks in advance,

Kumar

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2 Replies

Khushbu Jaiswal (CA Finalist) (528 Points)
Replied 03 April 2013

In my opinion you can do it and by transferring the available balance from CA A/c to OD A/c you can reduce your interest liability on OD a/c for the period upto which the transferred fund is not utilized.

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Mihir (Wealth Manager) (5293 Points)
Replied 04 April 2013

Overdraft facility is not free. Bank charges interest. So use current account. You can read the interest/fees schedule of your bank. In case the bank charges excessive interest, it will be your fault of not looking at the terms and conditions of operating overdraft facility. Bank won't be responsible.