A piece of machinery that is no longer needed

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a piece of machinery that is no longer needed Businesses do not always have surplus fixed assets which they can sell off There is also a limit to the number of fixed assets a firm can sell off This is a medium-term source of finance Advantages Good way to raise finance from an asset that is no longer needed Disadvantages Some businesses are unlikely to have surplus assets to sell Can be a slow method of raising finance
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INTERNAL SOURCES DEBT COLLECTION A debtor is someone who owes a business money A business can raise finance by collecting the money owed to them (debts) from their debtors Not all businesses have debtors ie those who deal only in cash This is a short-term source of finance Advantages No additional cost in getting this finance, it is part of the businesses’ normal operations Disadvantages There is a risk that debts owed can go bad and not be repaid
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EXTERNAL SOURCES There are five internal sources of finance: Bank Loan or Overdraft Additional Partners Share Issue Leasing Hire Purchase Mortgage Trade Credit Government Grants
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EXTERNAL SOURCES BANK LOAN This is money borrowed at an agreed rate of interest over a set period of time This is a medium or long-term source of finance Advantages Set repayments are spread over a period of time which is good for budgeting Disadvantages Can be expensive due to interest payments Bank may require security on the loan
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EXTERNAL SOURCES BANK OVERDRAFT This is where the business is allowed to be overdrawn on its account This means they can still write cheques, even if they do not have enough money in the account This is a short-term source of finance Advantages This is a good way to cover the period between money going out of and coming into a business If used in the short-term it is usually cheaper than a bank loan Disadvantages Interest is repayable on the amount overdrawn Can be expensive if used over a longer period of time
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