What are the sources of fund in finance and accounting?


Source of finance can be simply explained as follows −

  • Based on time
LONG TERMMEDIUM TERMSHORT TERM

BASED ON TIME



Equity sharesPreference sharesTrade credit
Preference sharesDebenture/BondsWC loans
Internal accruals
  • financial institutes
  • government
  • commercial banks
Fixed deposits (period of 1 year)
Debentures/bondsAdvances from customers
Term loansCreditors
Venture fundinglease financePayables
Asset securitizationHire purchase financeFactoring services
International finance
Bill discounting
  • Based on ownership and control
OwnedBorrowed

Based on ownership and control

Equity capitalLoans from
Financial institutions
Commercial loans
Preference capital
Retained earnings
Convertible debenturesDebentures
Venture fund/ private equity
  • Based on source generation
InternalExternal
Based on source generation
Equity capitalRetained profits
Preference capitalReduction in working capital
Retained earningsSale of assets
Convertible debentures
Venture fund/private equity

Updated on: 12-Aug-2020

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