The range of short term sources of finance is available for businesses including overdrafts, short term loans,lease finance & trade credit. Short term finance is frequently needed for businesses to run day to day operations activity including payment of wages of employees, inventory ordering & supplies. Businesses with seasonal peaks those engaged in international trade are most likely to be face heavy users of short term finance.
Sources of short term finance include:
* Overdraft facility: in overdraft bank allows a firm to take out more money as they required more than they have in their bank account.
* Trade credits, when supplier delivered goods now & are agreeable to wait for numbers of days before payment.
* Factoring, where firms sell their invoices to factor agency. They get cash right away, rather than waiting 30days to be paid the full amount.
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