Definition

Setting a plan for when money comes in and goes out. It keeps the business ready for daily costs and unexpected needs.

What to consider

  • Review repayment terms carefully.
  • Ensure borrowing fits the short-term need.
  • Plan for quick payoffs to avoid long-term debt.

Real world scenarios

  • A small business secures a line of credit for a three-month period to cover an unexpected surge in orders.
  • An entrepreneur takes out a short-term loan to finance a bulk inventory purchase.
  • A startup uses short-term financing to bridge gaps between revenue cycles.

Related terms

Entrepreneurial Finances