Cashflow

Overtrading is trying to do to much with too little long term capital so that the business finds it difficult to meet its short-term liabilities. It is not illegal as such because it is difficult to be definite about when it happens, but it can lead to failure of the business.

There is not a huge practical difference between revolving credit facilities and overdrafts. Overdrafts are repayable on demand whereas a revolving credit facility will have more formal repayment arrangements.