Term FinancingThe companies of all

Short-Term FinancingThe companies of all typesand the sizes resort to short-term financing. The short-term debt is borrowedfunds which are subject to return within a year, used for financing of currentcosts.Sources of short-termfinancing of the international firm aresubdivided into two primary groups: ·      Internal sourcesof financing; ·      External sourcesof financing. Kinds of internal financing are self-financing and theintra-corporate credits.

Generally, internal sources of financing of the firm are the retained earnings and depreciationredistributed in the firm by means ofintra-corporate international loans. Serve as external sources of financing offirm or its division bank financing (national, foreign and Euro currency) and receipt of means by means ofthe security market. 1.    Intra-corporate short-term financing Intra-corporate short-termfinancing represents mutually provision of loans to various divisions of thecompany and also loan granting by mother firm to the subsidiary companies andvice versa.

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 Such loans are granted in atype: §  Directinternational corporate credit; §  Back-to-backintra-corporate loan; §  Parallelintra-corporate loan. The benefit of this schemeof financing consists in the exclusivesimplicity of its registration. However,this method isn’t widespread in the international practice.If intra-corporate financingis impossible or too expensive, the firm can resort to: 2.    External short-term financing. §  Temporary(spontaneous) sources of financing The trade credit belongs tosources of spontaneous financing of the firm.

Its origin is connected with the transactions made by the firm. So, when purchasing other firms of goods,raw materials, accessories on credit at the considered firm have a debt whichis considered in the form of accountspayable (trade credit). The longer the accounts payable period and is more thana sales amount of purchases, the additional financing for the firm is more considerable.Trade credit (accounts forpayment) — a money which the company shall return to suppliers.

 The trade credit is the simplest and often theleast expensive form of financing of inventory stocks. 


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