The management of corporate financing consists of providing money or credit to obtain resources or means of payment that allow it to acquire goods and services, necessary for the development of its objectives. This is one of the most important management decisions since it implies the maximization of financial resources and their influence on the growth of the company.
There are several sources of financing for companies, generally divided according to their maturity and the source or source of resources . In the case of the expiration period, short-term financing, that is to say in less than one year, is produced through bank loans, discount lines and customer advances. Long-term financing, whose maturity occurs over a period of more than one year, is represented by bank loans, leasing and renting contracts (to acquire the assets directly), amortization funds and bond issuance.
Depending on the source of the resources, financing can be divided into internal or external. The internal financing or self-financing constitutes the funds that the company has generated thanks to its activity produced and that are reinvested in it. These reservations are managed in accordance with the statutes of the same company as it can be said with self-loans that must be returned.
In addition, capital in the form of shares is also a source of internal financing because it refers to the capital that a company’s partners present to obtain greater benefits in return. These shares may be convertible, preferred, current or non-voting shares.
On the other hand, external financing uses third parties to obtain the money, essentially through bank financing, issuance of bonds or obligations and capital from so-called investors, shareholders, creditors or credit institutions.
For public companies, financing is obtained from the capital of public administrations, also called subsidies. They are not refundable and must be used strictly to acquire assets or for the use of available resources.