Information about financing

Enterprises need financing for funding of their everyday activity and investments. The most important source of financing is the sales proceeds from their customers. This is an inevitable requirement for continuation of business activities. A fledgling enterprise often struggles with financing problems because there is no income stream from customers and, on the other hand, the fledgling business still needs cash to pay salaries, investments and other expenses. In the starting phase, it is useful for a fledgling entrepreneur to create a cash flow statement which shows how much money will be needed to cover the early stage negative cash flow (expenses more than income).

The long-term financing is dependent on the amount of equity (the investment of the entrepreneur or capital investors, retained earnings), outside capital (loans) or on some kind of transitional form of capital (capital investors' convertible bonds, subordinated loans). Short-term financing represents advance payments from predicted sales and own accounts payable and card credit etc.