benefits and problems of capital

trade capital

equity capital

debt capital

working capital

advantages

disadvantages

No Repayment Requirement

Lower Risk

Bringing in Equity Partners

Higher Cost

Time and Effort

Ownership Dilution

advantages

disadvantages

Customer Loyalty

Competitive Advantage

Increased Sales

Negative Effect on Cash Flow

Must Investigate Creditworthiness of Customers

Monitoring Accounts Receivable

Incentives for Customers to Pay

Financing Accounts Receivable

Possibility of Bad Debts

advantages

maximise growth, profit and shareholder value

helps companies achieve financial goals with funding they would not otherwise have access to.

can use debt capital as a part of its capital structure

disadvantages

Keeps You From Accomplishing Your Financial Goals

Borrows From Your Future Income

the business have to pay back the money they borrow with an interest rate

costs money

advantages

disadvantages

It also provides a cushion for when your company needs a bit of extra cash

enabling you to satisfy your customers' orders, expand your business, and invest in new products and services.

more flexibility

Increases the threat of bankruptcy and liquidation

Leads to significant consequences for your company.

Leads to late payment to the suppliers.

Increases the customer debt.