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Internal and external finance of a business
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[QUOTE="Holicent, post: 269353, member: 76163"] Internal finance is an important part of the overall business. It is a crucial factor for a company's success, but it is also very easy to neglect. While internal finance may seem like just another expense, it is often overlooked in favor of external finance. Internal finance includes all expenses that are part of a company's operations, such as payroll and maintenance costs, rent or mortgage payments and other fixed expenses such as advertising and research and development (R&D). Internal finance is the cost of the raw materials and labor used in the production process. The internal finance cost includes wages, salaries, equipment depreciation and maintenance costs. External finance includes those expenses that are not directly related to the company's operations but that have an effect on its bottom line. These include interest payments on loans, capital expenses such as equipment purchases, taxes and dividends paid out to shareholders. External finance can also be the cost of money borrowed to finance a business's capital needs. External finance can be obtained through borrowing from financial institutions or other companies. [/QUOTE]
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Internal and external finance of a business
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