different source of finance

Jun 18th, 2015
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Factoring: This is allowed for the company which is selling credit by factors. Factors give the businesses cash in advance (often up to 80% of the value of the debt) whether the debt is unsecured. They also supply the debtor management service that control and collect the debt from business debtors if business pay fees for them.

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2.1 Indentify and briefly discussed the costs of the different source of financeFactoring: This is allowed for the company which is selling credit by factors. Factorsgive the businesses cash in advance (often up to 80% of the value of the debt)whether the debt is unsecured. They also supply the debtor management servicethat control and collect the debt from business debtors if business pay fees for them.Bank Loans: A loan is for a fixed amount with a fixed repayment schedule and mayappear on a balance sheet with a specific name telling the reader exactly what theloan is and its main details. If an enterprise does not generate enough cash fromoperating, it will need to borrow funds in accordance with its cash budget. Bankloans are less flexible than an overdraft and it is for a set period of time. Rate ofinterest is lower than an overdraft and secured against the companys assets.Share Capital: Share capital is the Funds raised by issuing shares in return for cashor other considerations. The amount of share capital a company has can changeover time because each time a business sells new shares to the public in exchangefor cash, the amount of share capital will increase. Share capital can be composed ofboth common and preferred shares. Each share carrying a vote in the managementof the business, managerial control may be limited.Overdraft: This source is suitable to business that needs capital to solve the smallcapital problems, such as cash flow, but they

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