Sources of finance - Understanding Cashflow.
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Sources of finance Understanding Cashflow Within an organisation, money comes in and flows out. This is called the organisation's cashflow. From time to time, business managers may pose questions such as: * 'Can we afford to buy x?' * 'Are we going to be able to pay that bill?' * 'Wouldn't it be nice if we could develop y?' To answer such questions, they will often have to carry out some form of financial planning, and often to seek additional finance from outside the company. The key issues are: * What is the finance for? * How long will it be needed? * Is it affordable, i.e. can the firm keep up with the repayments? Common methods of finance Sources of finance fall into two main categories. Short-term finance is designed to be paid back quickly, while long-term loans may be paid over many years. Short Term Long Term Trade credit Mortgages Factoring Profit retention Leasing and hire purchase Venture capital Loans Equity Trade credit This is a useful source of finance provided...


