Internal Finance - Short Term.
- Cash in bank.
- Buying less stock to save money.
- Chase up debters (those who owe money).
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Internal Finance - Medium / Long Term.
- Retained profit.
- Using profit from previous years to expand the business.
- Sale of Assets.
- Selling off buildings and machines that are no longer needed.
- The owner puts in more money.
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External Finance - Short Term.
- The firm arranges with the bank to take more money from it's account than it usually does.
- There's usually a time limit and and the firm has to pay interest.
- Trade Credit.
- A firm buys stock and supplies and is given 30 - 90 days to pay.
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External Finance - Medium Term.
- Bank Loan
- Money borrowed for a certain time period and purpose.
- The bank will usually want security.
- Interest has to be paid.
- Loans are usually paid back bit by bit over time.
- Leasing (renting).
- Renting instead of buying equipment.
- Venture Capitalists.
- Very wealthy firms that invest in high risk but high reward firms.
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External Finance - Medium Term 2.
- Business Angels.
- Very wealthy individuals invest in high risk but high reward firms that they like.
- Hire Purchase.
- Buying equipment in stages using monthly payments.
- The equipment is yours when you make the final payment.
- Uncommen but useful - money is given to help people start businesses.
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External Finance - Long Term.
- Issuing Shares.
- Can only be done by Ltds and plcs.
- Can raise a lot of money.
- Long term loan to buy property.
- Paid back over time with interest.
- Like a bank loan but not from the bank.
- You pay interest each year but don't pay the whole thing back until the end of 5 or 10 years.
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