Short term finance is concerned with decisions relating to current assets and current liabilities and is also called as working capital finance.


Short term financial decisions typically involve cash flows within a year or within the operating cycle of the firm. Normally short term finance is for a period up to 3 years.


The main sources of short term finance are:


1. Cash credit

2. Short term loans from financial institutions

3. Bill Discounting

4. Letter of credit

5. Inter-corporate deposits

6. Commercial papers

7. Factoring

8. Working capital advance by commercial banks

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