Financing – basic funding considerations
Funding of business operations should correspond to the transactions to be financed with respect to their periods.
Take a look at a couple of examples below:
- Customer payment term 30 days – funding by current account
- Building project or assembly order, which requires several years – funding corresponding to the construction period
- Vehicle corresponding to the service life of the vehicle 3 to 5 years
- Capital goods corresponding to the service period of 8 to 10 years
- Basic funding of the consumption of goods for the average storage time of the goods
- Running operational costs (expenses for premises, salaries, communication costs etc.) for at least 3 months, usually through equity
- Real estate long term financing according to the planned use
Other modes of funding can be proposed as an alternative to bank credit.
This includes:
- Equity through retained earnings or payments of the shareholders into the capital reserves, entry of new shareholders etc.
- Mixed funding, profit participating loans (rate of interest of these loans depends on the net operating results), etc.
- Use of a platform, which connects the credit seekers with professional investors like family offices, asset managers as well as entrepreneurs and companies with investment requirement.
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