Unit 3A Glossary
BTEC Level 3 Business Studies. Unit 3: Business Finance
Bank loans - Fixed amounts of money that are given to businesses by banks that are paid back in installments over an agreed amount of time.
Cash sales - Money received from sales at the same time as the transaction of the good or service.
Commission received - Money received by a business from another business in exchange for services such as promoting their goods and services.
Credit sales - Money received from sales at a later date than the transaction of the good or service.
Crowd-funding - Gathering of small amounts of donations or investments from a large number of people. This is often promoted through social media or using organisations such as Kickstarter.
Debt factoring - A way of raising finance by selling your outstanding debtors (trade receivables) to another business who will then chase payments.
Donations - Money given to an organisation such as charity or voluntary organisation as a gift and therefore does not have to be paid back.
Expansion - An objective of a business to reach more customers by increasing its number of locations. This requires property investment.
External sources of finance - Funds that have come from outside of the business such as owner's capital, loans, crowd funding and leasing.
Grants - Money given to an organisation usually by the government that does not have to be repaid. It is usually to support a government objective such as lowering employment.
Hire purchase - A method of buying an asset by paying in installments but it is not owned by the buyer until the last payment is made.
Interest payments on deposits - The money paid to a business by a lender who borrowed money in addition to the repayments of the loan itself.
Internal sources of finance - Funds that a business generates itself such as retained profit, net current assets and sale of assets.
Invoice discounting - Borrowing money up to the amount that is owed in unpaid invoices.
Leasing - The rental of assets from another company in exchange for regular, usually monthly, payments.
Long-term sources of finance - Sources of finance a business uses to invest in projects and assets for periods lasting multiple years.
Market development - An objective to reach more customers by expanding into different markets such as overseas or different demographic segments.
Mortgages - Long terms loans, usually between 15 and 35 years, that can be taken out to purchase a property.
Net current assets - Money that a business has available for day to day spending. It is the difference between all of the current assets and the current liabilities.
Owner's capital - Money invested into the business that personally belongs to the owner from their personal savings.
Partnerships - A business owned by 2 - 20 people who are personally responsible for the business debts.
Peer-to-peer lending - Borrowing directly from another individual rather than from a financial institution. There are websites set up to match individuals or businesses that need to borrow money with lenders.
Private limited companies - A business owned by shareholders who can only lose what they invested. They cannot trade on the stock market.
Product development - An objective to increase customer satisfaction through improvements to products. This may require investment in research and development.
Public limited companies - A business owned by shareholder who can invest on the stock market. They can only lose what they invested.
Relocation - An objective to move the premises of a business to more efficient or profitable premises.
Rental income - Money received from a customer in exchange for the use of property the business owns such as retail premises or parking.
Retained profit - Money from profits that is reinvested back into the business after owners have taken their share of the profits or dividends have been distributed to shareholders.
Sale of assets - A method of raising money by selling assets that are no longer in use to improve liquidity.
Short-term sources of finance - Sources of finance that a business will repay within a year.
Sole trader - A business owned by one person who is personally responsible for the business debts.
Sources of finance - The range of methods a business can use to obtain money to fund their operations.
Sources of revenue - The ways in which a business can receive money from the provision of goods or services. These may be directly from selling activities or from supplementary activities.
Start-up - Businesses in the initial stages of development. They are usually funded by the founders as may do not yet have the revenue to cover costs.
Trade credit - An agreement to make purchases from another business without having to make payment straight away. Standard periods are 30 days but longer can be negotiated.
Venture capital - Investments made by individuals, banks or other financial institutions to businesses that are a more risky investment, usually newer businesses.
