P4 Describe Sources of Internal and External Finance for a Selected Business.

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Report to: Head of Finance
Report From: Monaj Gurung
Date: 23rd October 2012
Title: sources of internal and external finance for Waitrose Source of Finance
All business needs money in order to operate properly. Finance simply means the management of some amounts of money. And source of finance is generally the place where money comes from. Example Waitrose gets money by selling their products to the customers and hence customers are the different classes Internal and External source of finance. Internal Sources:

Internal source are usually from inside of the business organisation which are often preferable to any organisation as they will usually be cheaper and perhaps easier to arrange. However, the potential of arranging large amounts of finance may be lower than expected. The Internal sources of Waitrose might be: 1) Personal Saving: The manager of Waitrose might operate the company through saving in his own. Personal saving mainly applies to sole traders and partnerships. Waitrose owners may use some of their own money as capital to invest in the business. This is relevant to Waitrose Internal sources as it is assumed that money lent to the business will be paid back to the private individual in the future, possibly with an extra amount to compensate the individual for the help they gave. 2) Owners Investment: Owner investment, this is the money which comes from the owner’s own saving. It is relevant to Waitrose because the owners of Waitrose Waite, Rose, and Taylor first invested their own money before starting the business and when it gains popularity and goes in profit they put the profit in business and tried improving the things around them. And hence this shows that owner investment is very important when you want to start your own business in your own. Owners Investment means it doesn’t need to be repaid. It’s up to you if you want to keep the profit or put it on the business as Waitrose owners. 3) Sales: Sales are basically the...
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