Can my business benefit from bank overdraft in France?

Is an overdraft right for your French company?

Bank overdraft refers to the situation where you can still use your bank account and make payments, despite having no money left on your account. Since the overwhelming majority of companies in France have a dedicated bank account, how does it work for them?

Can my business benefit from it?

Yes, absolutely! The details of how it works depend on the bank. Generally though, your account will be able to function without money for 1 to 12 months, and you’ll have to pay interest based on the time your account was in the negatives. There’s also a maximum authorized overdraft, as you might expect.

Of course, since this is essentially an additional service from the bank, it has a fee. Again, the banks are free to determine their price, so we can’t give you a concrete price right here. Just to give you an idea though, for BNP Paribas, the fee is 1% of the maximum authorized overdraft.

When should I make use of bank overdraft?

It can be useful in quite a few situations. For example:

  • If one of your clients is late in paying you, you can remain able to function even if your account has to be in the negatives for a little while
  • If you know that you won’t be able to generate much turnover in the next month, but you know that clients will come back in 2 or 3 months.