2.1.1 Internal Finance

What do new businesses need finance for?

buying/renting equipment

paying for insurance/promotion/initial stock to begin trading

pay running costs (power, telelphone, wages)

What can new businesses do to attract sales?

sell on credit to their customers

What is internal finance?

Funds generated from within the business itself

What are four examples of internal finance?

Selling assets

Owners Capital

Retained Profits

Managing cash flow

Retained profits are…

profits that a business have made over time and kept in business instead fof distributing to owners and shareholders

Owners capital is..

funds that the owner of the business invests from their personal savings.

What type of business need owners capital?

sole traders

Sale of assets are..

the process of selling a businesses assets to make cash

What are some examples of assets?

Machinery

Buildings

Vehicles

Managing cash flow is..

reducing the time that customer’s have to pay invoices, while taking longer to pay supplies.