P4 Describe Sources of Internal and External Finance for a Selected Business.

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Report to: Head of Finance Report From: Monaj Gurung Date: 23rd October 2012 Title: sources of internal and external finance for Waitrose Source of Finance All business needs money in order to operate properly. Finance simply means the management of some amounts of money. And source of finance is generally the place where money comes from. Example Waitrose gets money by selling their products to the customers and hence customers are the different classes Internal and External source of finance. Internal Sources: Internal source are usually from inside of the business organisation which are often preferable to any organisation as they will usually be cheaper and perhaps easier to arrange. However, the potential of arranging large…show more content…
According to Rod Gammon a personal assistance in Waitrose, he said Waitrose gains lots of profit through Sales and without sales Waitrose, can be in financial crisis. Hence this will give them access to some capital, even though they are then burdened with annual leasing costs. Sales are a good way to raise financial from substances that is no longer needed. But even though there is some disadvantage for business. Some businesses are unlikely to have profit from the substances that they sell and can be slow method of raising finance for organisation. 4) Capital from Profits: Once a business starts to run properly it may be able to invest its money that came for their profit. This means that even bigger profit can be made in upcoming days. The amount of profit in Waitrose depends on how much profit the owners want to keep for themselves against how much they wants the business to expand. External Sources: External sources of finance are generally from outside the business. It involves business owing money to outside individuals or institutions. There are a number of different external sources that can be used to fund a business. 1. Banks: Banks are the most commonly used external source of finance. Waitrose do depends upon Banks as a part of External source. Sometimes they can be in loss but however they do need to pay their employees, rent, electrical and gases bills, etc. Hence they can take loan form the Bank and pay it later. As

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