Page 374 - F1 Integrated Workbook STUDENT 2018

Chapter 22

1.4 Bank overdraft/short-term loan

Short-term cash requirements can also be funded by borrowing from the bank. There
are two main sources of bank lending:

Bank overdrafts are mainly provided by the clearing banks and are an important
source of finance for an entity.

Bank loans are a contractual agreement for a specific sum, loaned for a fixed period,
at an agreed rate of interest. They are less flexible and more expensive than
overdrafts but provide greater security.

1.5 Financing exports

Financing
exports

Bills of Export Forfaiting –
Documentary exchange – factoring – Getting paid
credits –
Irrevocable A signed Similar to up front at a
letter of credit obligation to normal reduced
pay factoring value

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