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.
To start with one has to understand the funds currently available in the business that can be used by the business to make some investment in the short run, this determination will help establish how well is the business cash flows. Fixed costs determination of any business helps in making vital decisions about investment of any business, that being the case one has to be very keen on understanding the total fixed cost may be for every month so as to know the how to get the returns of financing the business. With those facts however one has to understand that financing business cash flow will be dependent on the uniqueness of the business, maybe if the business is new, business size, business sector 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. There are about three major categories of financing one can look for namely short-term financing, 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. Among the examples of medium-term financing are the commercial banks and other financial institutions. It is good to note that some of this financial institutions are even offering business finance without necessarily considering the creditworthiness of the business. In order for one willing to take a loan or business financing yet he has no good record of creditworthiness he should consider visiting the said financial institution and will be advised accordingly on how is that possible.