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Sources of finance - Coggle Diagram
Sources of finance
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Leasing
paying to use an asset in instalments, however the ownership of the asset remains with the supplier throughout the lease agreement
disadvantages: never actually own the assets therefore the payments are ongoing
the overall amount paid is likely to be higher than if purchased outright
advantages: the responsibility for maintaining and repairing the asset stays with the supplier
spread the cost of the asset over the lifetime to avoid paying a lump sum of money
Hire purchase
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disadvantages: only really suitable for low costs assets overall amount paid for the use of the asset is likely to be higher
advantages: avoids the need to pay a lump sum for the use of an asset regular installments which makes budgeting more easier
Trade credit
a period of time, offered by suppliers, to allow the customer to purchase now and pay later
disadvantages: potential loss of discounts offered by cash payments
only suitable as a short term source of finance
advantages: delays the need to pay for goods and supplies purchased therefore aiding cashflow
no loss of ownership or control
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Government grants
a lump sum provided to a business by the government or another organisation to be used for a specific purpose
disadvantages: often requires a long application purchase
might only be rewarded for certain candidates or conditions
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