How takeovers are paid for
Sources of finance Finance is needed throughout a company's life. The type and amount of finance required for a business depends on many factors: type of business, success of firm and state of the economy. There are two main types of money that a company needs. Capital expenditure: Used for buying fixed assets where large sums of money are involved but they are not purchased often e.g. new premises. Working capital: Day to day money required for running the business. There are two main sources of finance, these are internal sources and external sources. Internal sources include: Retained profit - profit made is reinvested into the business. Controlling working capital - reducing costs, delaying outflows and speeding up inflows. Sale of assets - Assets the company owns can be sold and then leased back which frees up a large amount of capital in the short term. External sources of finance: Increasing trade credit - delaying payments on purchases for as long as possible. Factoring - use a company to collect all debts.