What Are the Different Types of Short-Term Funding?

Short-term funds (1) The funds that an enterprise obtains from the money market and must be returned within one year. It is mainly used to supplement the temporary shortage of funds in the business process, such as daily required cash, capital advances of various receivables, seasonal material reserves, etc. The main methods of obtaining short-term funds are commercial credit, short-term bank loans, short-term securities circulation, and bill discounting. (2) The funds used by banks to lend to each other are very short, usually one day, several days, or more than ten days. ^[1]

Short-term funding

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Short-term funds (1) The funds that an enterprise obtains from the money market and must be returned within one year. It is mainly used to supplement the temporary shortage of funds in the business process, such as daily required cash, capital advances of various receivables, seasonal material reserves, etc. The main methods of obtaining short-term funds are commercial credit, short-term bank loans, short-term securities circulation, and bill discounting. (2) The funds used by banks to lend to each other are very short, usually one day, several days, or more than ten days. ^[1]

(1) Accounts payable and bills payable: Payments or bills payable to the supplier due to the purchase of goods, raw materials, materials, and labor services. ^[2]

The characteristics of short-term funds: short occupation period, strong cash-out ability, low capital cost, and low financing risk. ^[3]

Short-term fund raising methods: commercial credit, short-term bank lending, loans using inventory as collateral, inter-company lending, and internal fund-raising. ^[3]

1. Material property. Such as industrial raw materials, work in progress, semi-finished products, finished products, etc., and commercial commodity inventory. ^[2]

2. Claims receivable. Accounts receivable or bills receivable that should be collected from the purchaser or the recipient of labor services due to the sale of products or the provision of labor services.

3 Short-term investments. That is, all kinds of marketable securities (such as stocks and bonds) that can be realised at any time and held for less than one year, and other investments that are not more than one year, purchased with short-term idle cash.

4 Money funds. Includes cash on hand and bank deposits.

5. other. Such as other receivables, prepaid accounts, etc.