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5.1 Business Finances: Needs & Sources (Long Term (Hire Purchase (…

- - - - :pencil2: Profit kept in the business after owners have taken their share.
      - :+1: No interest, doesn't have to be repaid
        :-1: New/small businesses won't have enough
    - - :pencil2: Selling existing assets no longer in use e.g. machinery
      - :+1: Doesn't increase debts, better use of capital
        :-1: Takes time, not available for new businesses
    - - :+1: Reduces opportunity + storage costs
        :-1: Can disappoint customers if there aren't enough goods
    - - :pencil2: Sole traders/partnerships put their own savings in the business
      - :+1: No interest, available quickly
        :-1: Savings can be too low, increases owner's risk
  - - - :+1: Permanent source, doesn't have to be repaid, no interest
        :-1: Dividends, ownership changes
    - - :+1: Quick, varied lengths of time
        :-1: Interest, must be repaid
    - - :pencil2: Long-term certificates issued by limited companies
      - :+1: Long Term
        :-1: Interest, must be repaid
    - - :+1: Don't have to be repaid
        :-1: Have to meet requirements
    - - :pencil2: Agencies that "buy" debts from debtors for immediate cash.
      - :+1: Immediate cash, less risk of not collecting debt
        :-1: Doesn't receive 100% of the debt
- - - - :pencil2: Banks allows business to "overdraw" its bank account.
      - :+1: Can vary each month (flexible), cheaper than loans in ST
        :-1: Interest rates, repaid @ short notice
    - - :pencil2: Business delays paying suppliers
      - :+1: Almost interest-free
        :-1: Supplier may refuse to sell goods if not paid quickly