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Sources of short term financing

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Describe with substantiation, the sources of short term financing.

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This solution is comprised of a detailed explanation to describe with substantiation, the sources of short term financing.

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There are numerous sources of short-term funds, which can be divided into four major types of accruals, accounts payable (trade credit), bank loans, and commercial paper. For accruals, the company generally pays employees on a weekly, biweekly, or monthly basis, on the balance sheet will typically show some accrued wages. Similarly, there are also some accrued taxes from income taxes, Social Security and income taxes withheld from employee payrolls and sales taxes. These accruals increase automatically as a firm's operations expand. Further, this type of debt is "free" ...

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