Finance Flashcards
Short term sources of finance
Overdraft
Trade credit
Debt factoring
Government grant
Over draft means
Taking more money out that you have
Trade credit
Buying something then paying later
Debt factoring
Selling debts to another firm
Government grand
Get money from government that doesn’t need to be paid back
Sources of finance
Short term
Medium term
Long term
Medium sources of finance
Bank loan
Leasing
Hire purchase
Hire purchase
Used to buy equipment or vehicles
Bank loan
Borrowing money which is paid back
Leasing
Renting equipment or vehicles
Long term
Mortgages Share issue Debentures Sales and leaseback agreements Venture capital
What is cash budgeting
Is a method of planning and ensures there’s enough money to meet commitments
What causes cash flow
Purchasing capital equipment Low sales High expenses Too much borrowing Debtors not paying in time
Resolving cash flow problems
Discounts and promotion to encourage sales
Sell any unnecessary fixed assets
Arrange credit with supplier
Sale and leaseback
