Different Sources of Finance Essay

Sample Essay

Word length approx: 4212 words

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Every business needs finance to run on a daily basis. There are many expenses to be paid for and the inflow of cash into the business needs to be more than the cash outflow in order for the business to make a profit. The inflow and outflow of cash is known as cash flow forecasting. The cash flow forecast tells us that not having enough cash isn’t exactly a good sign for a business.

Without cash, no business and no household can survive. There are many uses of cash for a business; it can be used to pay wages, it can be used to pay for the advertising of the business, for expansion purposes and maybe even to pay interest on loans for example. However, we need to consider what the various sources of finance are. Where exactly does this money come from?

There are many sources of finance for businesses and each of these sources has its own advantage and disadvantage. No one source of finance is going to be appropriate; depending on the circumstances only can a business decision as to what type of source for finance it is going to make use of. For a business to be able to select the best type of source for them, it needs to evaluate the various sources available and according to the evaluation base their decision on it. The 2 main types of sources for finance are internal and external sources. Each of these sources…

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