Types of payment

Mind Map by , created over 6 years ago

GCSE Business Studies Mind Map on Types of payment, created by Teila on 05/13/2013.

Created by Teila over 6 years ago
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Types of payment
1 FORCAST: is an attempt to predict what will happen in the future. AD:helps plan for future. DIS: not always correct.
2 Over Draft: allows you to draw more money out than you own, intrest is charged on the daily amount taken.
2.1 Trade Credit: When a business' sells are good it may let another business take goods without paying straight away, normally an agreement is made for them to be paid with in 30 days or longer, this is process is normally intrest free it allows the business to sell them and get the money before there paid for.
2.1.1 Retained Profit: Profit made by the business but kept back for its own use, maybe used to help finance and purchasing of things (equipment, premises development programme) Sale of Assets: selling off and turning into something that the business owns, the assets that are sold may no longer be needed, this source may be used to help finance the purchased equipment. Bank Loan: an amount of money borrowed from the bank usually for a stated purpose, the bank take care with security in case the money is not repaid the loan is usually for a fixed period of time. Lease: a method of keeping itemsfor a stated period of time, at the end the items are returned to the owner (company cars, lorries computer equipment, industrial units and buildings) monthly annual payments depending on what equipment it is. Hire purchase: keeping item a in return for a monthly payment over a set period of time the items do NOT become the property of the user until the final payment has been made. (company cars, lorries etc..) a deposit has to be made followed by monthly payments may include interest rates. Grant: money made availble for a specific purpose by government or local councils Owners investment: the exsisting owners may invest money into the business, maybe used to pay for a major business development such as a takeover or long term debts. Cash in the bank: Money owned by the business that is built up in the bank over time due to sucsessful trading, can be used in day to day business buy buying assets and funding for development. Mortgage: Along term method of borrowing money it includes some form of security, help fund the purchase of a property. interest charges seem to be lower than other forms of finance the money borrowed has to be repaid with little interest. Taking a new partner: hold additional finanace by selling of oart of the business to a new partner, they may bring new skills to the business the finance that the partner brings to the business may be used to buy new equipment or to buy another business.the partner will have to stay in the running of the business and will be entitled to a share in the profits. Share issue: a sorce of finance used by limited companies to raise finance in return for a 'share' in the business, finance raised from a shre issued may be used to fund a major business development such as a takeover or extension to a factory, dividends may have to be paid on the shares and each share represents part ownership of the business. shareholders are entitled to have a say in the running of the company.

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