Short Term and Long Term Financing
Short Term Finance
What is Short Term Financing?
Short term financing is basically refers to additional money for a business which requires for running its business for short terms which is usually a period of one year. There are some sources of short term finance which are as following:-
Overdraft
Overdraft bank basically means a facility that the bank provides to its customers where the customer is given permission to draw money from the banks in surplus of their balance in their heir bank accounts. When taking overdraft from the bank, the account must be zero to get extras extension of money and the interest rate will be very high and we have to pay back the bank in a very short period of time.
Trade Credit
Trade credit refers to buying products and servicers of a business which needs in the course of its business on credit, depending on the trade practices prevalent in a particular industry, the nature of the business relationship between the supplier and the company may give a different time period to pay the products and services they buy from different suppliers. Exactly as companies get their credit from their suppliers, they must also give credit to their customers. The customers are given 50 to 60 days to pay up the bills. After 60 days, interest will be applied on the customers. If the customers are unable to pay, the will be asked for installment plan.
Bank Loans
Bank Loan means loans which are given to banks which need to repaid their installment over a fixed period of time which may be short or long term period. Even though it is called bank loans, these loans can be move forward by banks or other financial institution. Usually loans like this are generally given for a certain reason such as purchases of capital equipment.
Advantages/ Disadvantages of Short Term Finance
Short term financing is a method to raise funds which involves financial responsibility that is needed to be repaid within a year or less. Short
What is Short Term Financing?
Short term financing is basically refers to additional money for a business which requires for running its business for short terms which is usually a period of one year. There are some sources of short term finance which are as following:-
Overdraft
Overdraft bank basically means a facility that the bank provides to its customers where the customer is given permission to draw money from the banks in surplus of their balance in their heir bank accounts. When taking overdraft from the bank, the account must be zero to get extras extension of money and the interest rate will be very high and we have to pay back the bank in a very short period of time.
Trade Credit
Trade credit refers to buying products and servicers of a business which needs in the course of its business on credit, depending on the trade practices prevalent in a particular industry, the nature of the business relationship between the supplier and the company may give a different time period to pay the products and services they buy from different suppliers. Exactly as companies get their credit from their suppliers, they must also give credit to their customers. The customers are given 50 to 60 days to pay up the bills. After 60 days, interest will be applied on the customers. If the customers are unable to pay, the will be asked for installment plan.
Bank Loans
Bank Loan means loans which are given to banks which need to repaid their installment over a fixed period of time which may be short or long term period. Even though it is called bank loans, these loans can be move forward by banks or other financial institution. Usually loans like this are generally given for a certain reason such as purchases of capital equipment.
Advantages/ Disadvantages of Short Term Finance
Short term financing is a method to raise funds which involves financial responsibility that is needed to be repaid within a year or less. Short