Sources of Business Finance.
Positive cash flows are necessary for any business to remain relevant in the market today, this is due to the fact there are many factors that make business have fluctuating trends. 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. Determining the costs that the business has to incur whether making sales or not, is yet another important aspect one has to consider in order to have favorable cash flow statements. Depending on the uniqueness of the business one has to determine the best option to choose as a way of financing it, since every business will have unique needs e.g. it may be a small size business or a new business and so on.
Having done the above stages it now becomes easy for one to find the source of finance in order to finance the said business. 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. In short-term finance is commonly used to cater for short-term and current needs of the business obviously not exceeding one year for the repayment, mostly it is used to finance repairs, and maybe taxes. Drawing cash than the one in the business bank account also known as bank overdraft is one of the options one has to seek when looking for short-term business finance.
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. Commercial banks and other financial institutions are the best examples of this kind of funding that is medium term financing. Some of this financial institution are even offering to finance some business even thou, they lack the required creditworthiness for them to be financed. Despite that being the case of financing the business or individual though with poor credit rating, one should consider visiting the said financial institutions for further guidelines.