Tips To Fast Cash Loans

Finance is what allows business to exist. Adequate finance is necessary to meet the various commitments arising out of business transactions. The financial requirements of business can be broadly classified in to six categories- short-term sources and long-term sources.
Short- term finance is necessary to meet the working capital requirements of a business firm. These are the funds necessary for a period up to 1 year. The sources of short-term finance are: trade credit, bank borrowings, factoring of receivables, commercial paper and accrued expenses and deferred income. Trade credit refers to the type of credit provided to customers by suppliers of goods in the normal cause of business transactions. The trade credit is basically available and is dependent on personal relationship between the supplier and the buyer. It also offers better access to little and newly established business concerns by selling the goods on credit basis.

Banks constitute an important institutional source of financing the working capital requirements. Banks think about various aspects such as production and marketing designs of the customer while determining the credit requirements. The amount so determined by the bank is named credit limit. Bankers are necessary to fix separate credit limits for various types of credit facilities to be extended to various types of borrowers. Margins are kept by the banker before granting finance. This is based on the principle of conservatism and is decided to make sure safety of funds.

Banks extend the following type of financial facilities to customers: Over draft, Funds credit, Purchase or discounting of bills and demand loans. Over draft is a temporary arrangement whereby the customer is allowed to draw over and above the balance standing to the credit of the customer. Under funds credit facility, a borrower is allowed to withdraw funds from the bank up to the sanctioned credit limit. Demand loans are called the advertisement hoc or temporary financial accommodation granted to customers to meet unexpected contingencies. The borrower has to pay a higher rate of interest on these types of advances.

0 komentar:

Post a Comment