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Sources of finance

 

Business organisations finance their activities in a variety of ways and from a range of sources. Methods include reinvesting profits, borrowing, trade credit and issuing shares and debentures. Sources include the banks and other financial institutions, individual investors and governments, as well as contributions from the organisation’s original owners.

Structure, ownership and conduct of the organisation

Generally speaking as organisations become larger many external sources and methods of founding become available and utilising these can have implications. This latter point is perhaps illustrated by comparing sole traders and partnerships with limited companies.

Organisations who decide to acquire corporate status in order to raise funds for expansion become owned by their shareholders, who may be the original owners or may be the institutional investors holding equity predominantly as an investment and with little, if any, long-term commitment to the organisation they own.




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