In running a business, there are different types of finances that are needed. Basically this can be categorized into three types: short-term, medium-term, and long-term. Learn about these three types of finances and their sources from this article.
One important thing that is required when running a business is short-term finance. Short-term finance help fulfill certain business needs such as salaries, operating fees, taxes and other things, particularly for start up businesses which don’t have the profit yet. These short-term finances are very important as sales are not always consistent. There are times when the sales are significantly low and there are times, when they rise above the average. This is what makes short-term finance all the more important. Below is a list of some major sources where businesses could get their short term finance.
Medium-term finance is those that are planned for a span of 1-5 years. Medium-term finances are often used for replacing of certain facilities, after a long time of use. They are also required for modernizing the office space and so on. Updating business operations and are also one use of medium-term finances.
Below are some sources of medium-term finance:
The long-term finances are those which are needed on a more permanent foundation or for finances that are planned for over five years. These are needed for certain building changes or heavy operation plans. If there are new business plans, long-term finances is what is needed. Some sources of these finances are listed below.
In the modern world of business, the different types of finances are very much widely used. At times, they can be mistaken since some sources for long-term finance can also be sources for short-term finance. Overall, businesses should know about these things to better adjust their budgets and keep a steady cash flow.