Long Term Funding Sources

Course : Managerial Finance Lecture : Marc Credit Hours : 3 Credits Semester Sessions : 3 Semester, 2021/2022 Session Prepared By : Kenzo LECTURE NOTES LONG TERM FUNDING SOURCES To finance the operational activities of an organization/institution/ company, which the author summarizes below from various sources expert and author opinions regarding the distribution of funding sources organization/institution/company. The sources of these funds are: sources of funds short term, medium term and long term. 1. Short Term Fund Sources. The usual source of short-term funds used for working capital. Funds that belong to groups short term must be returned within a year or one accounting period. Short term funding sources can be obtained through short-term bank loan inventory financing, and credit trading. There are also those who give examples of shortterm funding sources namely: accurate accounts, trade payables, bank payables, commercial paper, factoring, and so on. 2. Medium Term Fund Sources. Source of medium term funds usually obtained from leasing, term loans, and equipment loans. As for the payback period for long-ter funding sources is usually ranges from one year accounting period to five financial years and may not exceed a period of five years. Use of funding sources Medium term is usually carried out for needs that cannot be met with short term funding. When funds are too tight returned in the short term, it will be classified as long-term intermediate. This funding can also be chosen when it is too difficult implement long-term funding schemes. There are those too said that the sources of medium-term funds are: term loans equipment loans, leasing, venture capital, and so on. 3. Long Term Fund Sources. The source of these funds is the company carry out massive expansion on a company scale then you can using long-term funding. As for the payback period Long-term funding sources generally last more than 5 years book. Types of longterm funding include publishing bonds and mortgages. Such as: Company funding sources from various sources parties, Suppliers for short-term financing, Retained earnings as funding sources from internal companies, banks for financing short, medium and long term, capital markets for financing long term and so on. There are also those who say the source of the funds long term such as: long term debt, preferred shares and ordinary shares. If seen from the management or administration of state finances in terms of state funding, Setia Mulyawan (2015 : 272 - 273) said in Law number 17 of 2003 concerning State Finance, There are various fundamental changes in three things which include: following. 1) Budgeting approach with a medium term perspective (medium term expenditure framework) KPJM is a policy-based budgeting approach carried out in a time perspective of more than one fiscal year with consider the cost implications in the following year expressed as a forward estimate. 2) Implementation of integrated budgeting (unified budget) An integrated budgeting approach is a budgeting approach which integrates the entire planning and budgeting process into one process. 3) Implementation of budgeting based on performance (performance budget) Performancebased budgeting is a model a budgeting approach that pays attention to the interrelationships between funding (input) with output in the form of output and outcome expected include efficiency in achieving results and the output. Setia Mulyawan (2015 : 288 - 289) said that there are four principles the basis of state financial management which is the main focus of attention in the Law, namely: 1. Accountability based on results or performance so that a framework emerges new work with the name "Performance-basedbudgeting (performance budget)” whose implementation is currently being tested and expected to begin in fiscal year 2005; 2. Openness of all government financial transactions; 3. Empowerment of professional managers; 4. The existence of a strong, professional and external audit institution independence and avoiding duplication in carrying out inspections (double accounting) Financial Management in one of the discussions is the source of funds One part of these funding sources is long-term funding sources.