internal sources of finance Flashcards
Owner Funds Advatages
no need to pay interest or repay finance
Retention of ownership by individual
Owner funds disadvantages
amount available may be limited
stress on day to day finance of individual
owner funds
money that put into the business from private saving of the owners
Retained Profit advantages
instantly available
control is not lost
retained profits disadvantages
limited funds available
short term returns on shareholders investment
retained profit
when business makes profit
sale of asset
some businesses will have possessions that they no longer need
bank loan advantages
makes cash flow easier
repayments in instalments
bank loan disadvantages
pay back interest
have to back up loan with security
bank loan
where the business will borrow a lump of some money that must be repaid overtime
overdraft advantages
enable short term funding
cover day to day expense
overdraft disadvantages
interest charged if overdrawn
overdraft
a pre-arranged amount of money that the business is allowed to use
Grants advantages
doesn’t have to be paid back
grants disadvantages
not available for all business
grants
money that doesn’t need to be paid back
venture capital
called an investor. start up businesses
hire purchase
asset until you make the last payment
hire purchase advantages
buying outright
cash flow
hire purchase disadvantages
long run due to fees
trade credit advantages
helps cash flow
trade credit disadvantages
provide the credit
trade credit
certain amount of days to pay, paying suppliers for stock
share capital
shareholders to become owners of a limited company
