External and internal sources of financing allow the company to remain independent. They ensure the correct circulation of cash flows, development and fulfillment of the conditions proposed by the state.
Financing an enterprise - a set of tools, forms, methods to ensure correct work. It can be internal and external. The first involves the use of resources that are formed in the process of financial and economic activities of the firm. An example is profit, accounts payable reserves. External financing includes funds received from founders, citizens, non-financial and credit organizations.
Features of the
When choosing sources, five tasks are solved:
- determination of capital requirements;
- identification of possible adjustments in the composition of assets;
- ensuring solvency;
- use of own and borrowed funds with maximum benefit;
- cost reduction.
Features of external financing
External financing is often the leading one, since it ensures the independence of the company and facilitates the process of obtaining loans. In the conditions of the current economic policy, production and economic activity is impossible without loans. They increase the volume of transactions, reduce the likelihood of work in progress. The use of such a source is always associated with the need for high-quality fulfillment of the obligations assumed.
Attraction of foreign investors can also act as an external source. High profits are important to them, but the higher the share of foreign investments, the less control remains with the owner.
The intricacies of internal financing
The peculiarity of domestic financing is the possibility of increasing financial stability, reducing loan costs. As a result of properly organized activities, the process of making strategic decisions is simplified.
The advantages of this type include the absence of additional costs associated with raising capital from external sources, maintaining control of the owner. But in practice, this view cannot be used in all cases. For example, the depreciation fund has ceased to be relevant, since the norms for most equipment in our country are underestimated, and accelerated methods of calculating depreciation cannot be relevant.
Types and classification
In Russia, all sources are divided into four main groups:
- own funds of the company;
- loans and credits;
- attracted money;
- assistance from the state.
In foreign practice, the money of the enterprise is divided into those that serve to implement short-term and long-term goals, debt and equity. At the same time, external sources - bank loans, borrowed money, proceeds from the sale of bonds and securities, accounts payable.
They are also subdivided according to the time of use. Short-term sources of funding are needed to pay salaries, purchase materials and solve current problems. Medium-term (for a period of 2 to 5 years) are required to pay for machinery, equipment and research. Long-term are relevant when buying land, real estate or making long-term investments.
The choice of the optimal source of financing depends on the experience of the company, the current financial condition and the specifics of development. If we talk about external sources, an enterprise can find capital only on the conditions on which financing of similar enterprises is carried out today.
In conclusion, we note: in any organization, financial balance must be observed. It represents such a ratio of own and borrowed funds, at which it is possible to pay off debts at the expense of the company's budget. The financial equilibrium point is calculated according to certain rules. It makes it possible to increase borrowed funds and use your capital rationally.
