Sources of Finance

1)An unexpected bill for repair of machinery. it must be paid immediately. The business has insufficient funds in it's bank account.

Bank Overdraft:
this is the most important source of finance for a very large number of businesses. Bank overdrafts are flexible. Interest is on paid by the business when its account is overdrawn. It is a short term exernal source of finance.The amount by which a business goes overdrawn depends on its specific needs at the time.

2)5 new delivery vehicles need to be purchased for the company.

Bank Loan:
A loan requires a rigid agreement between the borrower and the bank. the amount borrowed must be repaid over a clearly stated time period, in regular instalments. Most bank loans are short term or long term Banks dislike long term lending because of their need for security and liquidity. sometimes, banks change presistant overdrafts into loans, so that firms are forced to repay regular intervals.

3)A sport team needs new uniforms

sponsership:
sport teams can get sponerships from other companies where their logos and names can put on the uniforms therefore they would be paying them in return.

4) A new machine is required for a printing company
Bank loan
requires a rigidd agreement between the borrower and the bank, and there is a high capital cost.

5)a builder needs to buy materials for building a villa
Trade Credit
it is common for business to buy raw materials components and fuel and pay for them at a later date, usually within 30-90 days. paying for goods and services using trade credit seems to be an intrest free way of raising finance. it profitable during periods of inflation.

6)A new company is looking for a start up capital:
Venture Capital

the sale of hares can raise very large amounts of money. They often use provide funds for small and medium sozed companies that appear to have some potential. they attract money from financial institutions however there is an advantage which is a loss of control.

7) A firm looking to recover bad debts
Debt factoring
when companies sell their products they send invioces stating the amount due. the invoice provides evidence of the sale and the money owed to the company. Debt factoring involves a company providing finance against these unpaid invoices. a common arrangement is factor 80 percent of the value of invoices when they were issued.

8)a salesman is paaying for flights and accommodation for an overseas sales trip.
Credit Card
businesses of all sizes have uses for credit cards. they can be used by executives to meet expenses such as hotel bills, and meals when travelling on company business. they might also be used to purchase materials from suppliers who accept credit cards, they are convenient and flexible and secure and you can aviod interests charges.