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Unit 4 | Finance - Coggle Diagram
Unit 4 | Finance
Factors when choosing
Tax implications
Cost of interest / repayments
Security (collateral) needed
Control
Purpose of finance (matching principle)
Criteria used by financial institutions (e.g. banks)
Character
Capacity
Collateral
Creditworthiness
Household Budget / Cash flow
surplus, deficit, balanced
Dealing with a deficit
Offer discount for early payments from debtors
Finance
Reduce selling price
Adjust Payments / Expenditure
Increase selling price
Dealing with surplus
Savings account
Make a loan repayment e.g. mortgage
Save for future expenditure
Purposes of a Cash Flow Forecast
Identifying periods of cash deficits
Applying for finance
Identifying periods of cash surpluses
**Financial control (Business only)
a household/ business' planned income and expenditure in the future.
Sources of finance - know the advantages and disadvantages of each
Short Term Sources (repaid within 1 year)
Bank Overdraft
Credit Card
Trade credit
Accrued expenses
Factoring
Medium term sources (1-5 years)
Hire purchase
Medium-term loans
Leasing
Long Term Sources (5+ years)
Government grants
Long-term loan
Reserves
Issued shares