The sources of financing of a company are the ways that a company uses to obtain the financial resources that are needed and carry out a certain activity. The company must guarantee its survival in the world of business organizations, so it must carry out and manage all types of sustainable financing sources. Funding sources are all the resources you will use to ensure your survival.
In order for the company to enjoy assets and profits on assets, it must maintain a strong structure and the foundations of that structure are all the financial resources that it will use throughout its life. These resources will be included in the liabilities of the company.
One of the most striking purposes of the sources of financing is to guarantee, obtain and determine the necessary monetary funds to achieve increasingly larger and more profitable investments for the company. This is one of the most used ways to obtain financial resources.
External financing source
This source refers to commercial loans, credits and discounts by third parties. It is also considered a source of financing used in extreme cases, or when an investment is needed immediately but the money is not available.
In other words these are the sources provided by a third party, it is made by a person who becomes a shareholder of the company.
Short term
The payment plan is less than the year, that is, the loaned goods must be paid within that period. Factoring between companies stands out in this.
- Factoring: Where one company assigns the collection of its debts to another.
- Capitalize public payments: Refers to single payments made for public payments, a clear example of this would be unemployment.
- Contributions by partners.
- Commercial discount: Where a financial entity collects debts by subtracting all interest.
Long-term
The payment plan is more than one year, that is to say that the loaned goods can be paid in a fairly long period. In this stands out bank loans.
- Loans: Where a contract drawn up by a lawyer is signed, it consists of a loan of money, in which it must be paid within a certain period of time.
- Leasing: It consists of the payment of a loan from one company to another, but this time made in installments.
- Promissory note: It is a document that deducts a person’s promise to pay. This integrates payment and time in a given period of time.
- Crowdfunding: It is a payment through collective donations by a company.
- Crowdlending: It is a loan made by investors to a company.
- Credit line.
Internal funding sources
Internal sources of financing are the sources of a company. The company will have its own assets and expenses, and will not have to pay third parties, since it will not depend on outside investments. The negative of this type is that the amount to invest will be much smaller, but you will not have to pay for anything after this. Before doing it, a financial analysis must be done to see if it is capable or not.
They are also known as social capital, since they are those donations that are within the flexible budget of the owners and partners.
Short term
- Contributions from the owners and partners: It refers to the money given by the individuals who are part of the company, with the sole purpose of increasing the company’s budget.
- Amortization and depreciation: It is where companies recover the costs of investments, with this profits are reduced and it does not allow the entry or exit of money
Long-term
- Sale of assets: Refers to the sale of land, buildings, houses or machinery, in order to pay banking or financial needs.
- Accumulated liabilities: These are the taxes that must be paid by the company.
- Reinvested profits: It is where the partners do not distribute their dividends, but are invested in an association.
