Sources of finance


leasing: A legal document (contract) outlining the terms under which one party agrees to rent property from another party. A lease guarantees the lessee (the renter) use of an asset and guarantees the lessor (the property owner) regular payments from the lessee for a specified number of months or years. Both the lessee and the lessor must uphold the terms of the contract for the lease to remain valid.

hire purchase: Under this  contract, the buyer is leasing the goods and does not obtain ownership until the full amount of the contract is paid.

debt factoring: the company has the opportunity to sell invoices of customers that owe money to factoring houses, which provide cash but less than the total debt of that customer invoice.

start-up capital: the capital needed by an entrepreneur to set up a business

working capital: current assets – curent liabilities. The capital needed to pay for raw materials, other direct costs, some indirect which are made within a year, and credit offered to customers.

liquidation: not to confuse with liquidity. When a firm ceases trading and its assets are sold for cash to pay suppliers and other creditors.

issue shares: public issue by prospectus and arranging a placing of shares with institutional investors without the expense of a full public issue

venture capital

crowd funding: The use of small amounts of capital from a large number of individuals to finance a new business venture.


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