Sources of finance, the difference between cash flow and profit, and cash-flow forecasting.
Businesses need finance to start up, operate and grow.
Sources of finance
- Internal: retained profit, sale of assets, owner's savings.
- External: bank loans, share capital, overdrafts, trade credit, venture capital, leasing.
- Short-term (overdraft, trade credit) funds day-to-day needs; long-term (loans, shares) funds investment.
The best source depends on cost, the amount needed, how long for, and whether the owner wants to keep control.
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