• Funds are classified as long-term or short-term according to how long the business can count on them being available.
• Long-term funds = available for at least one year.
• Short-term funds = available for less than one year.

3.1 Long-Term Sources of Funds

• Share capital = money subscribed by shareholders.
• Shares represent individual portions of a company's capital; ordinary and preference shares can have different rights.
• Nominal/authorised/registered capital = amount authorised to be issued when the company is created.
• Issued and paid-up capital = portion of authorised shares actually issued and paid for.
• Long-term loans = e.g. bank loans.
• Debenture = long-term loan, normally repayable over a fixed future period, bearing interest and usually secured on assets; it is not share capital.
• Revenue reserve = profits generated and retained/reinvested in the business.

3.2 Short-Term Sources of Funds

• Creditors = suppliers providing goods/services on credit; delaying payment can provide cheap short-term finance but may damage supplier relationships.
• Bank overdraft = common and flexible short-term finance; technically the bank can demand repayment.
• Other short-term loans = loans with repayment periods of less than 12 months.
• Taxation due = taxes owed to collecting agencies but not yet paid, e.g. VAT.