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Source of finance - Coggle Diagram
Source of finance
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Retained profit
The retained earnings of a corporation is the accumulated net income of the corporation that is retained by the corporation at a particular point of time, such as at the end of the reporting period. At the end of that period, the net income at that point is transferred from the Profit and Loss Account to the retained earnings account
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Long term
Hire purchase
an arrangement for buying expensive goods, where the buyer makes an initial down payment and pays the balance plus interest in installments
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Leasing
allows your business to use an asset in exchange for rental payments, which may include an advanced rental, over a set period
The difference of them being that you will own your asset after hie purchase but for leasing, when your contract ends, you won't have the asset.
Share capital
the amount of money a company have invested in the business. Share capital is the money invested in a company by the shareholders. In return for their investment, shareholders gain a share of the ownership of the company.
Debenture
A debenture is a form of bond or long-term loan which is issued by the company. The debenture typically carries a fixed rate of interest over the course of the loan.
Bank loans
an amount of money loaned at interest by a bank to a borrower, usually on collateral security, for a certain period of time.
Business mortgage
let business owners borrow money needed to buy property or land for their business. Similar to a residential mortgage, the money is borrowed from a high street bank or specialist lender and is repaid in monthly instalments, along with interest.
Government grant
a financial award given by the federal, state, or local government to fund some type of beneficial project. Because government grants are funded by tax dollars, they include stringent compliance and reporting measures to ensure the money is well-spent.
Venture capital
a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.
Short term
Bank overdraft
An overdraft occurs when there isn't enough money in an account to cover a transaction or withdrawal, but the bank allows the transaction anyway.
Trade credit
an agreement between two businesses that allows one business (customer) to purchase goods or services from another (supplier) without paying cash up front, and instead pay at a later date.
Debt factoring
Debt factoring is when a business sells its accounts receivables to a third party at a discount, enabling companies to immediately unlock cash tied up in unpaid invoices without having to wait the usual payment terms. Debt factoring is also another term used for invoice factoring.