BankKeeping
If your business uses working capital funding from a bank, understanding Drawing Power (DP) is crucial. DP determines how much of your sanctioned loan limit you can actually use based on your business's current assets, such as inventory and receivables. It's a tool used by banks to ensure that funds are used for day-to-day operations and not for long-term or non-business purposes.
DP is relevant only to working capital limit facilities like Cash Credit (CC), not for term loans or overdraft limits.