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fin200 short term financing - Running head CHECKPOINT...

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Running head: CHECKPOINT: SHORT-TERM FINANCING 1 Check Point: Short-Term Financing Nikki Vergets Fin/200 5/12/2011 John Simulcik
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CHECKPOINT: SHORT-TERM FINANCING 2 Check Point: Short-Term Financing After a business has been established, funds are required for the business to meet its day to day expenses. Raw materials must be purchased on a regular basis, workers must be paid wages regularly and, water and power charges have to be paid regularly. For financing such requirements like this, short-term funds are needed. Some sources of short term financing are trade credit, bank credit and financing through commercial paper. Trade Credit: Trade credit refers to credit granted to manufactures and traders by the suppliers of basic material, finished goods and, components. Businesses usually buy supplies on a 30 to 120 days credit. Meaning that the goods are delivered but the payments are not made until the end of the period of credit (, 2009). An advantage is that it eases the cash flow as you can pay after 30-35 days (2009). A disadvantage is only companies with good credit history can
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