Short term finance refers to additional money a business requires for periods under one year. Common sources of short term finance include bank overdrafts, which allow businesses to draw more money than in their accounts up to a limit; trade credit, where suppliers allow purchases to be paid for over time; factoring, where accounts receivable are sold to firms who pay upfront and collect payments; credit cards for employees' business expenses; leasing equipment instead of purchasing; and bank loans repaid in installments over short terms.

1. SHORT TERM FINANCE

2. SHORT TERM FINANCE
Short term finance in business usually refers to the
additional money a business requires for doing its
business for short terms, which is usually a maximum
period of one year. Some main sources of short term
finance are bank overdrafts, trade credit, factoring,
credit card, lease and bank loans.

3. OVERDRAFT
Overdraft is a facility that bank provides to its
customers in which the customer is permitted to draw
money from banks in excess of the balance in their
bank accounts. In overdraft facility the bank specifies
the maximum amount of debit balance in the account
that is permitted. This limit is sometimes referred as
bank limit.

4. TRADE CREDIT
Trade credit refers to purchasing goods and services a
business need in the course of its business on credit.
Depending on the trade practices prevalent in an
industry, the credit worthiness of the company, and
nature of business relationship between company and
its suppliers a company may be allowed different time
periods to pay for the goods and services they buy from
different suppliers.

5. FACTORING
Factoring refers to a system of selling the accounts
receivable to specialist finance firms, who for a fee, pay
the amount due to the company upfront, and collect it
from debtors as and when due.

6. CREDIT CARD
Credit card is a facility similar to trade credit, in which
the the buyer pays the credit card company which in
turn pays the supplier. The credit card are generally
not issued to companies but to the individual
employees or owners of the small businesses, who may
then use this facility to pay for business expenses such
as travel.

7. LEASE
In this alternative a business leases some of he
equipments required rather than purchase them
outright.

8. BANK LOANS
Bank loans refer to term loans given by banks which
need to be repaid in installment over a fixed period
which may be a short term or long term period.
Though called bank loans, these loans may be
advanced by banks or other financial institution. Such
loans are generally given for specific purposes such as
for purchase of capital equipments.