Business Finance Needed and its Kinds

Capital required to conduct the business in audit to achieve different object  called business finance.

Needed of Finance 

 Finance needed for the following objective.

Fundamental Need  
The business man has to decided nature, sit, scale of technique and the marketing of his product. All such matters need finance for adviser, exports and surveyor etc.


Establishment 
The business is to be set up. Land purchased and machinery also ordered. Building is to constructed, supervisor, manager, watchman are to be employed. Infra-Structure like transport, communication water and power are to arranged.

Operation
 The business is to be started. Working capital needed for the purchase of raw material; labor force is to be employed. Wages are to be paid to them. Interest is paid to the bank etc.

Maintenance
 
The productive capacity of the firm is maintain. The work out machinery repaired some stock replaced. Research carried out to improve technique of production.

Growth and Development
Every firm has to grow and develop to earn maximum profit. New plants are setup. Latest machinery installed. New markets surveyed. Scale of production extended.

Emergencies
Finance needed to cover the unexpected risk and emergencies. So More funds needed to meet the labor strike, demand for higher wages bonus and new taxes etc.

Kinds of Business Finance

Finance needed for development purpose like the purchase of land and stock capital of goods construction of building as well as infra structure. Funds also needed for emergencies; social security’s and welfare of the labor force etc. finance are of three kinds.

Long Term Finance

The duration of such finance is between three to ten years. So loans taken for the purchase of land and equipment, construction of building and infra structure and the replacement of old machinery with latest one.

Medium Term Finance

The duration of finance is between one to three years. Such finance needed to meet the fundamental needs of the firm as well as for operation

Short Term Finance

It ranges is between 30 days to one year. So loans taken for operation and maintenance like the purchase of raw material, payment of tax, wages and rent and all other emergencies.

 
 

Leave a Reply

Your email address will not be published. Required fields are marked *