Flashcards-Short term Financing

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What is short-term financing?

Back

Financing used to meet a business’s short-term cash needs, usually for less than one year.

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Why do businesses need short-term financing?

Back

To cover temporary cash shortages, manage working capital, or fund seasonal operations.

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State key advantages of short-term financing.

Back

Flexible

Quick access to fund

Improved liquidity

No long term commitment

Front

What is trade credit?

Back

When suppliers allow businesses to buy goods now and pay later, usually within 30–90 days.

Supplying goods without immediate payment of cash

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What is bank overdraft?

Back

An arrangement allowing a business to withdraw more than its account balance up to a set limit

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What is commercial paper?

Back

An unsecured short-term debt instrument issued by large, creditworthy companies to raise funds.

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What is a letter of credit?

Back

A bank guarantee ensuring a supplier will be paid once specific trade conditions are met.

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What is deferred revenue?

Back

Payment received from customers before goods or services are delivered.

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What are accrued expenses?

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Expenses incurred but not yet paid, such as salaries or utilities due.