Normally capital funds from operating flow is a general cause of distress for most small businesses. Sometimes there is an overlap between capital funds and operating funds. Ergo the entrepreneur should clearly demarcate the funds and furthermore prevent himself from abusing the category of any funds. For this purpose, there are three types of funds, which are classified in the following categories.
Short-term funds are usually repaid within one year. And normally these funds are used for operating purposes, more precisely day-to-day operations like inventory replenishment, funding receivables etc.
Intermediate funds have a repayment period of more than one year and less than five years. These funds are used for bigger expenditures like capital equipment or inventory transaction.
Long-term funds is the last category and has the longest period of repayment. In compatibility with its name, the funds are used to finance buildings, expansion or projects other than day-to-day operations.
Short-term funds are usually repaid within one year. And normally these funds are used for operating purposes, more precisely day-to-day operations like inventory replenishment, funding receivables etc.
Intermediate funds have a repayment period of more than one year and less than five years. These funds are used for bigger expenditures like capital equipment or inventory transaction.
Long-term funds is the last category and has the longest period of repayment. In compatibility with its name, the funds are used to finance buildings, expansion or projects other than day-to-day operations.
