SOURCES OF EXTERNAL FINANCE - Other Businesses
Other business - funds that can be provided by other businesses, sometimes referred to as B2B finance. Typically businesses with healthy cash balance may look to invest in other businesses.
This may be with a view to higher potential returns than the business is receiving with cash sat in the bank. This is particularly true at present with low interest rates.
Alternatively, this may be to support another business e.g. set up a subsidiary business, support a supplier or support a customer.
ADVANTAGES OF OTHER BUSINESSES
This may be with a view to higher potential returns than the business is receiving with cash sat in the bank. This is particularly true at present with low interest rates.
Alternatively, this may be to support another business e.g. set up a subsidiary business, support a supplier or support a customer.
ADVANTAGES OF OTHER BUSINESSES
- Includes trade credit, factoring (buying invoices), hire purchase and leasing and corporate venture capital.
- Trade credit is only short term
- Factoring reduces profitability
- Hire purchase and leasing can be expensive
- Venture capital may involve some loss of control.
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