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TYPES OF SHORT-TERM FINANCING:

A. SPONTANEOUS SOURCES OF FINANCING:

1) Accruals:

Accruals are the current liability formed because of the delay of
payment in two situations.

First, deliberately delaying the payment because the practice has
become a habit of.

For example, wages should be paid after a job is done. This means
that companies should pay the salaries of workers every day.

But being a widely accepted practice, most employers pay wages at
the end of the month. The company will use the salary expenses that
should have been paid, but deferred to the end of the month.
Salaries may be first used to pay operating expenses such as
payment providers, utility expenses and so forth.

Second, accruals which exist when the funds for certain fees have
been collected in advance even though the actual date of payment is
late. Example: Deduction must be on the employee's wages as a
contribution to the Employees Provident Fund (EPF). Funds can be
collected at the end of each month.

But the EPF provides that the payment will have to be paid at the end
of every month. Therefore, the company can use these funds as
additional funding if necessary for the next three weeks without
incurring any cost.

P / S *
Does short-term financing involves any cost? Sources of financing
through accruals are actually free as long as companies follow proper
management practices of financing.