Management and organization

Week 4: Finance & Accounts

I, Finance in business activities
• Setting up a business costs (start-up capital)
• Day-to-day finance – e.g. pay bills (working capital)
• Business expansion finance
• Research expenses (chi phí)

II, Duration of the finance

L o n g – term
S h o r t – te r m M e d iu m – t e r m
f in a n c e
f in a n c e f in a n c e
L e s s th a n 1 B e tw e e n 1 a n d 5 M o r e th a n 5
year y e a rs y e a rs

III, Capital and revenue expenditure

• Capital expenditure: assets purchase that will last more than 1 year
(buildings, machinery, facilities)
• Revenue expenditure: spending on all costs and non-fixed asset
(salaries, materials for stock)

IV, Source of finance

 Sources of finance

Internal External

Personal finds Short – Medium – Long –

(only for sole traders) term term term

Profits retained Bank Hire

overdrafts purchase Long – term bank loan

Sale of assets Leasing Debentures

Trade
credit (loan stock / corporate
Efficient Medium – bonds)
management of term bank Sales of shares
working capital Debt loan
factoring (Equity finance)

Grants

Business Angels

* Internal Sources of finance

* (Short – term) External Sources of finance

* (Medium – term) External Sources of finance

* (Long – term) External Sources of finance

V, Making the financing decision

VI, Type of costs