Case 3 - Articulated Lorry Dealer

This business had an £80,000 overdraft limit with their bank.

During a business meeting a fleet of articulated lorries were offered for purchase at a very favourable price, the catch being that they had to be purchased almost immediately.

Although the company did not have sufficient cash flow available their bankers were contacted to get permission to write a cheque that would take them £200,000 over the limit that was currently in place.

The bank agreed to cover the cheque. A buyer was secured for the new inventory (at substantial profit) however it would take a further eight weeks for payment to be received.

When the bank statements arrived the company noticed a somewhat substantial increase in the interest charges - more than expected. An audit by BANKCheck revealed that although the cheque had been paid by the bank, a new limit had not been put in place resulting in surcharge interest rates of base + margin + 12% being applied to balances in excess of the limit, in this case £200,000.

The result was an overcharge of £24,000 which when compounded and refunded amounted to £28,000.