Sources To Meet Working Capital Requirement

There are various working capital sources. There are external outlets as well as internal ones. The external sources are both short-and long-term in nature.

External short-term sources include export credit, commercial banks, finance firms, indigenous lenders, public deposits, consumer advances, accrual accounts, loans and advances from directors and company firms, etc.

Companies may also issue debentures, and accept working capital public deposits that are long-term external sources. Working capital can also be used for equity funds. Below, a brief review is attempted on each source.

You can also get working capital finance at

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Trade Credit is a short-term credit facility which is used by raw materials suppliers and other suppliers. It is a frequent source.

This is a significant source. Trade credit is an informal credit facility that is readily available. It is vulnerable. This is also flexible; it is possible to discuss advance retirement or credit term extension.

Export credit may be more costly because the seller will inflate the price to compensate for the interest loss due to delayed payment.

Commercial banks in the country are widely focused and reasonably developed as the next significant source of job capital finance commercial banking network.

The key types of working capital financing offered by commercial banks are straight loans, cash advances, hypothecation loans, pledge loans, overdrafts, and bill buying and discounting.  

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