MANAGING FINANCIAL RESOURCES AND DECISIONS

Managing Financial Resources and Decisions

Managing Financial Resources and Decisions

Task 1

Overdraft Facility

Boatline Ltd uses the overdraft facility; overdraft is crediting the bank checking account to pay for their client settlement documents in case of insufficiency or absence on the current account of the borrowing client funds. In this case, the bank debits the money from the customer's account in full, that is, automatically gives the client a loan in an amount exceeding the remainder of funds.

Overdraft facility differs from the usual overdraft loan so that debt repayment sent all amounts received on account customer. Sometimes given a grace period to use an overdraft facility in which interest for the use of credit is not calculated. It depends on the monetary policy of the bank. For individuals interpretation of the described concept is different. Overdraft is a loan that the borrower can take advantage of, which appears a temporary need for cash. Many banks allowed overdrafts overrun lending funds. Use of credit resources are managed under the interest, and, in this case increased (Anthony and Marcia, 2005, 14-16).

Bank loans

In the event of insufficient equity, Boatline Ltd can borrow from a financial institution. It is important to know that the amount of bank loans which come under the category of external source of finance that will be granted will depend on the quality of the project and guarantees Boatline Ltd can offer. It will also depend on Boatline Ltd personal contribution. It also consider leasing, which can be an interesting way to fund certain investments by avoiding cash flow problems related to payment. Boatline Ltd need to maintain a minimum cash to fund its daily operational activities, the long-term financial situation may depend on the resources that are achieved in the short term which is why financial managers should take steps to secure these resources, so they must know which are the entities that at one time can help them out of a potential liquidity problem (Anthony and Marcia, 2005, 14-16).

Loan from the Suppliers

Boatline Ltd can borrow the loan from the supplier, an account payable from the supplier is any amount owed ??as a result of purchase of goods or services in terms of credit. Account payable is an obligations of the economic entity to third parties on different bases to suppliers and financial obligations such as commercial accounts, a parent, related companies, contractors, purchase orders to use, costs and expenses payable installments payable, official creditors, royalties payable, payable to shareholders or members, dividends or payable, withholding, payroll deductions and contributions, fees for return and sundry creditors (Anthony and Marcia, 2005, 14-16).

Implications of Sources of Finance

In credit from the bank, the Boatline Ltd can have implications like a very strict bank conditions, may unduly restrict the ease of operation and be detrimental to the profits of the Boatline Ltd. A bank loan borrowing rate brings the Boatline Ltd must cancel the bank sporadically in interest.

In the bank overdraft, Boatline Ltd can have problems as it does not only provide ...