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Business finance - Coggle Diagram
Business finance
Short term sources of finance
Bank overdraft
When a bank allows a business to take out more money than in the account
Trade creditors
When a business buys supplies on credit and pays for them on a later date. They can use the money to pay for other expenses
Expenses due (accurals)
Some expenses do not have to be paid immediately and that money can be used to finance the business
Medium term sources of finance
Hire purchase
Renting an asset and having full ownership over it when the asset is fully paid
Term loan
A loan taken out over a period of 1-5 years
Leasing
Renting an asset but never having full ownership over it
Long term sources of finance
Grant
A sum of money given out by the government or EU
Retained earnings
When a business is financed using its profits
Long term loan
A loan taken out over a period of 5+ years
Expenditure
Capital (one-off)
Current (day-to-day)
Crowdfunding
Using an online platform to raise money from multiple people
Lending-based
Lending money to a business in return for a repayment
Equity-based
Allows people to become part owners of a business by trading their own money for shares of the business
Donation-based
Raising funds for causes or creative projects
Matching principle
Meeting long term needs with long term sources of finance, and vice versa