WK 7 - SHORT TERM FINANCING - Short-term financing options...

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Short-term financing options can help to pay suppliers, increase inventory and cover expenses when you may not have sufficient cash on hand. Short-term borrowing should be used for working capital requirements for day to day operations of a business. Industries with seasonal peaks and troughs and those engaged in international trade will be heavy users of short term borrowing finance. Lenders favor businesses that exhibit strong management, steady growth potential and reliable projected cash flow. Firms prefer short-term financing instead of long-term sources of financing due to: easier availability usually has lower cost, matches need for short term assets, like inventory. A few sources of short-term financing would include: Short-term loans - borrowing from banks and other financial institutions for one year or less. Trade credit - This the basic source of finance and many entrepreneurs do not realize that by acquiring items on credit they are obtaining short term finance. Credit just like any other source of finance has interest element hidden which most
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This note was uploaded on 05/07/2010 for the course ACCOUNTING ACC225 taught by Professor Professor during the Spring '10 term at University of Phoenix.

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