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FINANCE AND ACCOUNTS (Factors Concern on Financing Decision (Amount…

- - - - Hire purchase and leasing
        
        Hire purchase is and asset belong to the company is sold to a company which agrees to make fixed repayments over an agreement time period
        
        Leasing is obtaining something neccessity by paying rental or leasing charge over a fixed period
      - Medium-term bank loan
    - - Trade credit
        
        Delaying the payment of bills for goods or services. Further lengthening of this trade credit period becomes a source finance for the debtor business
      - Debt factoring
        
        Selling of claim over debtors to a debt factor in exchange for immediate liquidity
      - Bank Overdrafts
        
        One of the most flexible of all sources of finance
        
        Bank allows the business to overdraw on its account at the bank by writing cheques to a greater value than the balance in the account
    - - Debt
        
        Debentures
        
        Bond issued by companies to raise debt finance, often with a fixed rate of interest each year
        
        Long-term loan from banks
        
        Banks provide loan to companies and offer either a variable or a fixed interest rate. Bank has the right to sell an asset
      - Equity finance
        
        Sale of shares
        
        Companies are able to sell further shares up to limit of their authorised share capital in order to raise additional permanent finance
      - Others
        
        Business Angels
        
        Individual investors who put their own money to help other entrepreneurs start their own business to the point the business would require a greater level of funding
        
        Microfinance
        
        The provision of very small loans by specialist finance businesses to poor people, usually not traditional commercial bank
        
        Grants
        
        Grants from some agencies are given to small busineses or those expanding in developing regions of the country
        
        Subsidies
        
        Financial benefits given by government to a business to reduce costs and encourage increased production
        
        Venture Capital
        
        Risk capital invented in business start-up or expanding small businesses, which have good profit potential but do not find it easy to gain finance from other sources
  - - - Any profit remained, is kept in the business for future activities
    - - Sell assets that they still intend to use but which they do not need to own to a leasing specialist and leased them back
    - - Commonly for sole traders
      - Injection from owner's savings
    - - Reducing business's working capital by cutting back on current assets - selling stocks or reducing debts