Short Term Finance
The main sources of short-term finance are:
Trade Credit: It refers to credit granted bygone business firm to another. Trade credit is granted without any security for periods ranging from seven days to six months. The price charged for goods supplied on credit is generally higher than that charged on cash sales.
Bank Credit: Commercial banks provide short-terms finance to business in the form of overdraft, accredit, discounting of bills, and advances. Credit is provided gnome security and interest is charges.
Installment Credit: Under this system, a businessman can buy a buy an asset without making full payment. The amount is payable uninstallers along with interest.
Hire Purchase: In this system also price is payable in installments. But each installment is created as a hire charge. The buyer becomes owner of the asset after payment of the last installment.
Lease Finance: The owner of the asset hires it out to a business firm for a fixed period and/or rent. After the expiry of lease period the owner may sell the asset to the lessee or may take it back.
Commercial Paper: A company can issue commercial paper than matures payment between three and six months. The company must satisfy the prescribed conditions before issuing such paper.
Customer Advances: A business firm can raise short-term finance by asking its customers to make advance payment against goose ordered by them.