Short-term sources of finance (Edexcel GCSE Business): Flashcards
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Practise the cards
12 cards from this deck
Repayment timeframe for short-term finance
Repayment timeframe for short-term finance
Within twelve months
Repayment timeframe for long-term finance
Repayment timeframe for long-term finance
Up to 25 years
What a bank overdraft allows
What a bank overdraft allows
Spend more than in account, up to agreed limit
How interest is charged on bank overdrafts
How interest is charged on bank overdrafts
Only on the amount actually used
What trade credit allows
What trade credit allows
Receive goods now, delay payment for set period
Common trade credit payment periods
Common trade credit payment periods
30 or 60 days
Type of funding trade credit provides
Type of funding trade credit provides
Free short-term funding
When cash-flow problems occur
When cash-flow problems occur
Not enough money for immediate obligations
Can profitable companies fail due to cash flow?
Can profitable companies fail due to cash flow?
Yes, even if profitable on paper
Examples of immediate needs for short-term finance
Examples of immediate needs for short-term finance
Purchasing inventory or covering utility bills
Examples of why businesses need finance
Examples of why businesses need finance
Wages, expansion, new products, startup costs
Risk of mismatching finance type to business need
Risk of mismatching finance type to business need
Creates serious financial problems