For any business to survive, it has to have enough of funds for its daily operations to run on. In addition to this, since businesses have to be dynamic in ever-changing markets and industries, there should be finance available to adapt to any prevailing changes. Depending on the existing strategy of the business, or revised strategies put forward by top management, new business ventures and business opportunities will have to be explored and exploited, and for this, there should be sufficient funds in the business to do so. The goals of a business also have a huge impact on the level of finance required in the business, as if the business has a goal of growth, a lot of reserves will be needed as these will be made use of for expansionary purposes. However, in the real business world, it is unrealistic for all businesses and companies to have a high amount of funds available within the business for whatever required purpose. Therefore, decisions will have to be made regarding how to obtain the necessary finance for business activities.
Finance can be either long term, medium term or short term finance. Short term finance is the funds needed for every day operations, in other words, the money needed to keep the business running, or money needed for day to day expenditure. Long term finance, on the other hand, is funds needed for expansionary measures or investments, or the purchase of non-current assets. Medium term finance is needed for investments and payments that are not as heavy as long term investments but not as simple as everyday funding either. For example, the handing over of debts to a business debt collection agency can be either short term or medium term based on the value of the debts to be collected and the purpose for urgent recovery.
In some cases, the activities of a collection agency could be considered a source of long term finance if the debts are of a very high value. This is sometimes due to bad management and improper follow-up of credit sales. This can be a source of long term finance if the money runs into millions, as this could then be utilized for the purchase of non-current assets, such as vehicles. However, it is unlikely as it is usually used to improve the cash flow position of the business.Other ways of obtaining finance also include selling off unnecessary noncurrent assets, obtain band loans or bank overdrafts or methods of hire purchase if the purpose of finance is to buy a long term asset. Visit this link http://www.kearleylewis.com.au/ for more info on collection agency Melbourne.