Small Business Financingby Stephan Fleming Digital Marketing Expert
Financing small businesses is a time consuming activity for the business owner. It can be the most important part of growing a business, but keep in mind that you should not let that business go. Financing is the relationship between cash, risk and value. Manage everyone well and you will get a good financial mix for your business.
Short-term financing is needed to meet current business needs. Current needs may include payment of taxes, payroll or salary, repair costs, payment to the creditor, etc. The need for short-term Financing arises because sales revenue and purchase payments are not always exactly the same. Sometimes sales can be lower than purchases. Additional sales can be made on credit, but the purchase is in cash. Therefore, short-term funding is needed to address this imbalance.
Billing Discount: Bills can be deducted from banks. This saves the account holder cash which can be used to meet immediate needs.
Bank Overdraft: A source of trade finance is widely used. This customer may withdraw a certain amount in addition to the initial balance of the account. This makes it easy for the entrepreneur to cover unexpected short-term expenses.
Advances from customers: Advance payments are mainly requested and received to confirm orders.
Fractional Shopping: Fractional shopping gives you more time to pay. Deferred payments are used as a small source of financing for immediate payment.
Bill of Lading: The Leading Bill and other export and import documents are used as collateral for borrowing from banks and the loan amount can be used as short term financing.
Financial institutions: Various financial institutions also help entrepreneurs overcome financial difficulties by securing short-term loans. Some cooperatives may arrange short-term financial support.
Created on May 2nd 2020 21:38. Viewed 469 times.