Sources Of Finance For Synergy International Limited

This report will research available sources of finance for Synergy International Limited to enable the company to invest in new machinery, at a cost of approximately  £225,000, in order to manufacture mobile phone covers for the Samsung S7 Edge. Also included in this report, are the information needs of the different decision makers. There are long term external sources of finance that Synergy International Limited could access; they could issue preference or ordinary shares although there would be issue costs. Finance, in the way of term loans or a mortgage could also be sourced from banks and other financial institutions; often these are secured with assets which is usually land and property if a mortgage is being sourced. To avoid†¦show more content†¦There are short term external sources of finance available in the form of a bank overdraft which is flexible and can be increased/decreased instantaneously (subject to bank approval). These can be inexpensive to arrange with competitive interest rates but these rates are higher than a term loan and this is not a secure form of finance as a bank overdraft could become repayable on demand. Another source of short term external funding to be considered is asset based finance which is utilised by debt factoring which will reduce tied up funds in the customer accounts and is outsourced to a subcontractor. According to Dyson, ‘there are two types of factoring: recourse factoring, where an entity obtains a loan based on the amount of its debtor balances and non-recourse factoring, where the debtor balances are sold to a factor and the factor then takes responsibility for dealing with them. Factoring is a convenient way of obtaining ready cash but either the interest rate on the loan or the discount on the invoices may be high’, (2010:437). Short term Internal sources of finance can be achieved by using tighter credit control, therefore exercising good cashflow management by reducing terms and payment period to customers although potential lost sales and the reputation of the company should be considered together with credit policies adopted by rival businesses. Synergy International Limited could also improve cashflow byShow MoreRelatedMod 5 Slp1309 Words   |  6 PagesMergers, and Acquisitions Trident University International Strategic Corporate Finance FIN 501 MOD 5 SLP Introduction Garmin is a global supplier of Global Positioning Systems. The company targets primarily the aviation, maritime and fitness industry. Garmin is the current leader in the GPS market boasting the highest equity and lowest debt in the industry. 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