AVAILABLE SOURCES OF FINANCE TECHNIQUES

Consider a start-up telecommunication organization which needs sources of finance for its business. There are several available source finance for this telecommunication organisation such as the ones mentioned below.

Bank loan

This type of source comes under the section of debt financing in which the bank offers loans to the telecommunication organisation for a fixed interest rate. The bank provides short, medium and long term financing schemes on investment capital, equipment cost and infrastructure cost in the exchange of some guarantee or mortgage on personal assets.

Angel equity

This is a finance source which requires the telecommunication organisation to sell an ownership stake to an investor willing to invest high amount of money in the organisation.

Government bonds

These are the schemes provided by the government of the country in which the telecommunication organisation is operating in. These bonds offer the organisation financing solutions with flexible interest rates.

Economic development organisations

These organisations provide the telecommunication organisation with very good financing solutions at a very good interest rate.

Smart leases

Leasing out several fixed assets to the investors allow the telecommunication organisation to get some cash flow which may help it to improve its business.

AVAILABLE SOURCES OF FINANCE

Customers and vendors

Advance payment from the customers and the vendors allows the telecommunication organisation to solve some of its financing problems.

Friends and family members

This is a source of finance which can be used by the owner of the telecommunication organisation to borrow some monetary resources from friends and family members.

Internal revenue service (IRS)

This source of finance can be used to reduce expenses. If the profits of the telecommunication organisation are used properly for the expansion of the business, then the tax bill of the organisation decreases which leads to the increase in the total amount of the monetary resource available in the organisation.

Impact of finance on financial statements

The financial statement of the telecommunication organisation is the formal report published by the organisation in specific time interval which describes all the financial activities of the organisation along with all of its assets. Generally the financial statement refers to the balance sheet, stock price, auditor’s report, income statement, cash flow statements, accounting policies and summary of the key financial data of the telecommunication organisation over a long period of time. The various sources of finance are debt financing, leases, equity, personal investors and government bonds. Each of these finance sources is responsible for impacting the income statement, cash flow statement, stock price and the balance sheet of the telecommunication organization.

Leasing of certain assets is a common source of finance. Due to leasing the telecommunication organisation avoids some of the expenses such as maintenance expenses, depreciation expenses and some other costs related with the assets. These expenses of holding the assets cause the organisation to spend a lot of finance which in turn increases their minimum total expense. This affects the financial statement of the organisation.

The organisation which allows investors to buy its shares needs to present their financial statements after consulting with the IAS and other regulating bodies in the country. This affects the income and balance sheets of the telecommunication organisation, which in turn affect the financial statement of the organisation.

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