In business today, financing is a vital aspect as it helps the business not only to grow, but to be sustainable, for your business to be successful, you need to understand your finance options and evaluate, but before you can source for finance outside, it is necessary to check within the capabilities of the organization before sourcing externally for finance, we will explore the different methods a company can source for funds internally.
there are basically two ways in which you can source for finance internally, these are the external source and the internal source of finance.
Short term internal finance
This is a short source of internal financial which can quickly revitalize a business,the short term finance includes tighter credit control, delaying payments to trade payable;
Tighter credit control: if you are really serious on making money internally, then you should start with reducing the credit you give out to your customers, this will enable you to have more cash at hand instead of your cash to be tied down and used by your creditors. you must create a policy which will help to reduce the number of your debtors, but you have to consider the credibility as well as reliability of your customer, you don't want to offend them, you have to evaluate the credibility of your customers and align to tightening of your credit control.
Delaying payments to trade payable: this is a form of getting quick funding for your project, you can delay the payment of your creditors and quickly finance your business, this will help you also to have more cash for your operations and other liabilities (e.g payments of salaries and rent, etc.) you should not offend your creditors by delaying your debt for a very long time, explain to them always that that you need more time to pay back, also, you can only do this for within the payback period, if you have to extend the payback period (if your creditors are lenient) you should extend it, it could be the fastest source of finance that can revitalize your business, you should also put in mind that they could come to you and patronize you so as to also have credit from you, you have to be very wise when dealing with them and deal with them properly.
Long term internal finance
the long term source of internal finance : this source of internal finance is long termed, they are as follows:
Retained earnings: this is a vital part of the business as it depicts the profit of the business, it also can be called ploughing back on profits, the retained earnings imply the accumulation of profit of the organization after a period of time, it implies that the organization can choose to use their profit to re-invest in the business.
Assets sales and leaseback: sales of assets could also create a short term funding for your business, you can sell assets like your car, machinery, etc, you can also lease out your machines and collect funds from your customers, you could also use the 'sales and leaseback; method, this is when you sale your machinery and lease it back to yourself with prior agreement from the individual you sold the machinery to.
you can have the utmost of financing your business by searching internally, this will enable you to have quick funding, and also at little or minimum risk, you can also revitalize your failing businesses by seeking for the internal source of finance, this will ensure smooth operational activities of your company. Good luck!!!
Attend The EPIC BLOGGING Seminar (Jan 29th - 30th, 2016)
0 comments:
Post a Comment
Please, no email address or phone number in your comment. Tick "Notify me" to follow the conversation and get notified whenever there is new comment!