– Hire Purchase The cost is spread The are owned by the hire paying for over a over a period of time purchase company until the last period of time. which can help with instalment is paid. budgeting. Leasing – A fixed amount is paid The business leasing the Similar to renting. each month which equipment or premises never Businesses often lease helps budgeting. Also, owns the item. These leased equipment and/or out of date or faulty items will also belong to the premises. equipment is replaced leasing company. or repaired by the leasing company. Factoring – Saves the business The factor charges the business A factor is used to time pursuing a fee for their service. buy the debts of the customers and Most factors are only interested business and then ensures the business in pursuing customers who owe attempt to recover receives most of the large amounts of money payment from money it is owed. therefore small debts may go customers. uncollected. Short term bank loan As the loan is short Loans can be difficult to obtain – a bank loan may be term there will be less and the interest rate to be paid provided for a short interest payments. can be high. time. Long-term sources of finance Source Advantages Disadvantages
Hire Purchase – paying for over a period of time. The cost is spread over a period of time which can help with budgeting. The are owned by the hire purchase company until the last instalment is paid. Leasing – Similar to renting. Businesses often lease equipment and/or premises. A fixed amount is paid each month which helps budgeting. Also, out of date or faulty equipment is replaced or repaired by the leasing company. The business leasing the equipment or premises never owns the item. These leased items will also belong to the leasing company. Factoring – A factor is used to buy the debts of the business and then attempt to recover payment from customers. Saves the business time pursuing customers and ensures the business receives most of the money it is owed. The factor charges the business a fee for their service. Most factors are only interested in pursuing customers who owe large amounts of money therefore small debts may go uncollected. Short term bank loan – a bank loan may be provided for a short time. As the loan is short term there will be less interest payments. Loans can be difficult to obtain and the interest rate to be paid can be high. Long-term sources of finance Source Advantages Disadvantages
outcome_1_pupil_notes.docx