19) Short Term Finance Flashcards
1
Q
Why does a business need finance?
A
Capital expenditure Day to day business activities Expansion Research PESTEC
2
Q
Short term sources of finance
A
Bank over draft Trade credit Factoring Grant Retained profits
3
Q
Bank overdraft
A
Allows business to overdraw on its bank account so it can continue to pay business expenses
High interest rates
4
Q
Trade credit
A
Allows business to buy goods and pay for them later
5
Q
Factoring
A
A factor buys the debt for a reduced amount and takes responsibility for collecting money owed
Business doesn’t revive full amount
6
Q
Grant
A
Money given to a gauge as by central or local government that does not have to be payed back
They can be complicated to apply for
7
Q
Retained profits
A
Can help when cash is needed
Less money available to grow and expand
