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Vocabulary. The businessman and his bank
The businessman and his bank
The bank plays an important part in the activities of a businessman. The owner of a company will open a Current Account with a bank on commencement of a business. He will deposit the daily proceeds of the business into this account. The bank will supply the company with a cheque book of 25 to 50 cheques. The manager will pay the company’s bills by issuing cheques. The bookkeeper of the company will check the correctness of each bill and obtain the approval of the manager before making payments. He will fill up the cheque with the date and state the amount payable in words and figures. The cheque must be signed by an authorised person. It should be made payable to the company which supplied the goods or services.
If a company has surplus funds its manager may place them in a Fixed Deposit Account. The money cannot be withdrawn for an agreed period of time such as six months or a year. This will enable the bank to use the depositor’s money for which it will pay him interest. The rate of interest will depend on the period of deposit.
A bank often helps a businessman by allowing him to issue cheques for an amount in excess of the funds he has in the account. The latter will have to pay interest on the loan. This service is called an overdraft. It will be reviewed by the bank every year. The bank may increase, decrease or cancel the overdraft facility at its discretion.
Payment for goods imported from a foreign country can be made through a bank. One way to do this is for the buyer to purchase a bank draft for the amount payable. He may request that the bank draft be made payable in the currency of the supplier. The buyer would pay his bank the equivalent amount plus the bank commission in the local currency. Because of these services and many more banks are a great help to businessmen.