sources of finance fresh mania
Short-term sources of finance; day-to-day working capital: Trade credit: If Fresh Mania is unable to pay its suppliers on time for their supplies, we would then get trade credit from suppliers. This allows Fresh Mania to repay the suppliers after a certain period of time thus allowing them to be in a better cash position. By using trade credit to solve Fresh Mania’s financial problems allows the business to pay back their suppliers without any interest. Usually there is an average credit period of two months, thins gives Fresh Mania sufficient time to raise the capital and repay the suppliers. However, by utilising this method of raising finance the Fresh Mania could develop an unhealthy relationship with its suppliers who may refuse to give discounts or refuse to supply any more goods if payment is not made quickly. ... Bank Overdrafts: another way Fresh Mania is able to adopt if we want to raise finance for short term then overdraft facilities are available from banks. ... Nevertheless, it may be beneficial for Fresh Mania in the short run, but it will be very costly when Fresh Mania will have to repay the bank.