Internal sources of finance are funds found inside the business. For example, profits can be kept back to finance expansion. Alternatively the business can sell assets(items it owns) that are no longer really needed to free up cash.
External sources of finance are found outside the business, eg from creditors or banks.
Short-term sources of external finance
Sources of external finance to cover the short term include:
- An overdraft facility, where a bank allows a firm to take out more money than it has in its bank account.
- Trade credits, where suppliers deliver goods now and are willing to wait for a number of days before…