3.1.1
Internal Finance
Internal Sources of Finance
Internal Sources of Finance
Internal sources of finance describe the money that is created or raised within a business. The business doesn’t need any other stakeholder to get access to this money.


Retained profit
Retained profit
- This is the profit that the business has effectively saved whilst it has been operating (running).
- Retained profit is a cheap source of finance because a business does not have to pay any interest.
- Retained profit is limited. A business can only spend profits that have been saved.
- Retained profit may not be high enough to fund big, long-term projects.


Selling assets
Selling assets
- A business can sell its assets to raise cash. For example, a business can sell buildings or machinery that they do not use.
- They are usually a cheap source of finance because the business does not have to pay interest.
- However, selling assets can harm a business’ operations.


Personal savings
Personal savings
- This is personal money that is invested by the owner of a business.
- It is most relevant for start-up businesses, in which the entrepreneur has saved up to fund his business venture.
- A downside is that it can be very risky for an entrepreneur to put a significant amount of their personal savings into a business. They may not be able to afford this.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
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