What Is In-House Financing?

Internal financing is the opposite of "external financing". The company uses its own internal funds, that is, accumulated undistributed profits to raise funds required for investment projects. [1]

Internal financing

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Internal financing is the opposite of "external financing". The company uses its own internal funds, that is, accumulated undistributed profits to raise funds required for investment projects. [1]
Internal financing refers to financing that an enterprise relies on its internal accumulation, which specifically includes three forms:
Internal financing has the characteristics of originality, autonomy, low cost and resistance to risks. Compared with external financing, it can reduce the problem of information asymmetry and related incentives, save transaction costs, reduce financing costs, and strengthen residual control of the enterprise. However, internal financing capacity and its growth must be constrained by the company's profitability, net asset size, and future earnings expectations.

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