Explain different sources of short-term finance available to the organization.

Organizations often require short-term finance to meet their day-to-day operational needs, cover temporary cash flow gaps, or take advantage of short-term opportunities. Short-term finance sources are typically used for a duration of up to one year. Here are some different sources of short-term finance available to organizations:

1. Bank Overdraft:

   • A bank overdraft allows a company to withdraw more money from its bank account than it currently holds. It provides flexibility in managing cash flow fluctuations.
   • Interest is charged only on the amount overdrawn and for the period it is overdrawn.

2. Trade Credit:

   • Trade credit is an arrangement where suppliers allow the organization to buy goods or services on credit with a specified payment period, such as 30, 60, or 90 days.
   • This source of finance is often used to manage accounts payable and improve cash flow.

3. Short-Term Loans:

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