external sources of finance: short-term

Question 1

what are some sources of finance used mainly to improve?

Answer 1

cash flow

Question 2

what does the external sources of finance which are short term used to ensure?

Answer 2

that the enterprise has sufficient money to pay its short-term liabilities

Question 3

bank overdrafts:
what does the bank allow the enterprise to do?

Answer 3

to spend more than it has in its bank balance, up to an agreed limit.

Question 4

bank overdrafts:
who may used bank overdrafts?

Answer 4

may be used by start-ups and small enterprises

Question 5

bank overdrafts (advantages):
why is a bank overdraft a flexible method of finance?

Answer 5

as the enterprise only uses the overdraft facility when it needs to, for example to meet a cash flow problem

Question 6

bank overdrafts (advantages): what can be done quickly?

Answer 6

bank overdrafts can be arranged quickly

Question 7

bank overdrafts (disadvantages):
what are payable to the bank?

Answer 7

Interest, which may be at a high rate, and charges are payable to the bank

Question 8

bank overdrafts (disadvantages):
what has the bank overdrafts be repaid within?

Answer 8

a short amount of time

Question 9

trade credit:
what are current assets purchased on credit with?

Answer 9

payment terms of 30-90 days

Question 10

trade credit:
when is a trade credit often used by enterprises to do?

Answer 10

often used by enterprises to buy raw materials or products to sell on

Question 11

trade credit (advantages):
why is it good for cash flow?

Answer 11

because in some cases, the enterprise may be able to sell on the products before paying the supplier for them

Question 12

trade credit (advantages): what can not be paid?

Answer 12

interest

Question 13

trade credit (advantages):
why may an enterprise be offered by suppliers?

Answer 13

in order to generate additional sales from business customers.

Question 14

trade credit (disadvantages):
what can trade credit only be used on?

Answer 14

Can only be used to buy certain types of goods

Question 15

trade credit (disadvantages):
what are loan/credit only available up to?

Answer 15

only available up to the payment terms agreed with the supplier

Question 16

trade credit (disadvantages):
what can result in cash flow problems for the supplier?

Answer 16

The customer may not pay for the supplies they have received, or they may take longer than the credit terms agreed

Question 17

crowdfunding:
what is crowdfunding?

Answer 17

a way of funding a small enterprise by raising money from a large number of people who each contribute a relatively small amount

Question 18

crowdfunding:
what does networking build up?

Answer 18

Networking is building up mutually beneficial relationships with other professionals
associated with the enterprise.

Question 19

crowdfunding (advantages):
why is it not very risky?

Answer 19

Can test the market before spending larger amounts on inventory or materials

Question 20

crowdfunding (advantages):
what can all be kept in the enterprise?

Answer 20

equity

Question 21

crowdfunding (advantages):
why is networking helpful?

Answer 21

has networking with backers and their contacts.

Question 22

crowdfunding (disadvantages):
how can an enterprise convince people to invest?

Answer 22

they would need to spend time and money

Question 23

crowdfunding (disadvantages):
what charges a fee?

Answer 23

crowdfunding platforms

Question 24

crowdfunding (disadvantages):
who is it not suitable for?

Answer 24

Not suitable for all types of enterprises