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Advantages of internal finance
Capital is available immediately
Cheap
The business wont be subject to credit checks
No need to involve third parties
Capital
The money provided by owners and producers
Capital expenditure
Spending on business resources that can be used repeatedly over a long period of time
Disadvantages of internal finance
Can be limited
Not tax- deductible
Inflexible compared to other methods of finance
Opportunity costs are high
Internal finance
Money generated by the business or its current owners
Retained profit
Profit after tax that is put back into business
Revenue expenditure
Spending on business resources that have already been consumed or will very shortly
Sale and leaseback
The practice of selling assets, such as property or machinery, and leasing it back from the buyer
External finance
