Sources of Business Finance.
Due to the fluctuating of market forces in the business world today it is quite important if any business makes proper arrangements in order to have positive cash flows. In order to have positive cash flow every business has to come to terms and plan quite well for some issues, when these factors are well catered for then the business will tend to have positive cash flows hence sail in the markets comfortably.
First of all, one has to consider the funds available in the business currently that is funds available less owners capital so as to get the funds available for investment, this will help determine what the business itself can finance. Having determined that one has also to understand the actual fixed costs of the business say maybe for about a month or so, this will help determine the funds the business is using whether making sales or not in order to run day to day operations of the business. Despite considering the above options, one has to know that business cash flow will be determined by the uniqueness of the business, that is, maybe business size, owner resources, or even business module.
Finding the source of business finance will be the next big thing after making the necessary important factors as seen above. Depending on the nature or need of one’s business there are some options one can choose as ways of financing his business, namely, short-term finance, medium-term finance, and long-term finance. For financing needs that are current and would require urgent care one should look for short-term business financing, commonly it will be used to cater for expenses like un budgeted repairs and so on. Among the examples of short-term business financing is the bank overdraft, whereby the business will be allowed to draw more money than what is actually in the account, this kind of financing is easy and does not have high rate of return.
For those businesses that would like to service the financing for a maximum of about five years and below, they may opt for medium-term financing, this kind of financing is commonly used to finance in acquiring new machinery or business re-engineering. Among the examples of medium-term financing are the commercial banks and other financial institutions. Some of this financial institution are even offering to finance some business even thou, they lack the required creditworthiness for them to be financed. However in order for this to work out, one needs to visit the said financial institutions and understand the policies laid down for one to be financed yet with poor creditworthiness.