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Finance for a new business. Mischa and Claire will need money to get them started. There are two basic costs linked with starting a new business, capital costs and start-up working capital.

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Introduction

Finance Own Savings - many entrepreneurs have savings from previous income or may have inherited money. A major advantage of this source of money is that interest does not have to be paid. Relatives and friends can sometimes be persuaded to lend money, but they may want interest to be paid and will almost certainly want their money back at some stage. Bank Overdrafts - an overdraft is an agreement with the bank where the customer can 'overdraw' money from the current account. Interest rates are higher than those for a loan but charged on the balance each day. They are far lower for an arranged overdraft than for one that has not been previously agreed with the bank. Bank Loans - this is where money is borrowed for a fixed period and repayments (including interest) ...read more.

Middle

They will need start-up working capital to buy stock for the business, such as: brooms, mops, dusters, window leathers and cleaning potions. They will also need capital items; these are items that will last a long time. It is needed for items such as: phone lines, phone and two Dyson cleaners, brooms, mops, dusters, window leathers and cleaning potions. Operating costs are the routine costs incurred to keep the business running. These include: staff wages, materials, telephone bills, utility bills, insurance and any investments. Mischa and Claire's operating costs will be: mops, window leathers, cleaning potions, brooms for when they get worn out or used up and telephone bills. Cash flow is the amount of money that flows in and out of a business bank account. Mischa and Claire will need to forecast their cash flow, so that they will be able to predict any problems they may have in the future. ...read more.

Conclusion

Delivery Note Claire and Mischa will get this from their supplier as proof that they have received the delivery. Goods Received Note Claire and Mischa will need to send this to their supplier to tell them whether the goods are sent are in good condition. Sales Invoice Claire and Mischa will receive this from their supplier so that they can check the prices, VAT, full details of goods and discounts. Statement of Account Claire and Mischa will receive a statement of accounts, on it is a list of invoices and any credit note that has been issued and the total amount the company own. It is important for Claire and Mischa to organise their expenses because of legal requirements. They will need to keep financial records so that they can evaluate and check their businesses performance, by doing this it makes sure that they can take action when needed and they can check that no unexpected problems will take place within the business e.g. fraud by staff or customers. ...read more.

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