What might be a consequence of relying on a bank overdraft frequently?

Relying on a bank overdraft frequently can significantly impact a business's financial health, leading to potential financial instability. When a company regularly relies on overdrafts to cover its cash flow needs, it may indicate that the business is experiencing ongoing cash shortages. This reliance can create a cycle of borrowing that is hard to break, especially if the business struggles to generate sufficient revenue to support its operational needs. Over time, frequent overdraft usage may lead to increased expenses due to interest and fees, strain the relationship with the bank, and potentially hurt the company’s credit rating. Moreover, it may limit the company's ability to invest in growth opportunities or weather unexpected financial challenges, ultimately threatening its long-term viability.

In contrast, the other options, like increased customer trust or enhanced asset management capability, are not direct consequences of heavy reliance on overdrafts. Instead, consistent overdraft usage might lead customers to perceive the business as financially unstable or poorly managed. Lower interest rates may also not materialize since frequent overdraft reliance can lead to higher perceived risk for lenders, thereby keeping or even elevating the interest rates associated with borrowed funds.