Internal sources of finance

Owner’s Investment

This money comes from the owner. It may be in the form of start up capital or may be in the form of additional capital. This is a long term source of finance.

Retained Profits

This source is only available if a business has been trading for more than one year. It’s when the profits are ploughed back into the business. This is a medium/long term source of finance used for growth strategies.

Sale of current assets

This capital comes in from selling off unsold stock. This is what happens in January sales. This is a short term source of finance to help with day to day running.

Sale of non current assets

This capital comes from selling off things such as a piece of machinery or property that is no longer needed. Businesses do not always have surplus non-current and which they can sell off. There is also a limit of the number of non current assets a business can sell. This is a medium term source of finance.

Debt collection

A Trade Receivable is someone who owes a business money. A business can raise finance by collecting the debt from their trade receivables. Not all businesses have trade receivables. This is a short term source of finance.