IntroductionFinancing a business means that the business raises money to run its operations. It is an essential part of running a business because without business finance, the business will not be able to develop, grow or even start. Additionally, business finance maintains cash flow. Companies usually raise funds from shareholders, long-term and short-term sources. There are risks in every decision investors make to finance a business since no one knows how it will fare in the future. Factors such as natural disasters, economic crises and changes in market demand could destroy the company. Therefore, it is sometimes difficult for businesses to raise funds if investors do not want to take the risk. Short-term financing and long-term financing Short-term financing and long-term financing are divided into internal and external financing sources. Internal sources of financing are sources that come from your own business. External sources of financing are sources that come from outside the company. A company's internal and external sources of financing can also be divided into short-term and long-term financing. Short-term financing means raising funds that must be repaid within a year to manage daily operations, including purchasing inventory, daily supplies and paying employee salaries. Long-term financing involves purchasing new equipment, expanding the business, improving research and development, and also strengthening the cash flow system. Businesses are allowed to repay over a much longer period of time, such as 10 years. This clearly demonstrates that the most obvious differences between short-term and long-term financing are the duration of the financing and its purposes. However, these are not the only ones... central part of the article......m [11 March 2014]Pizzey, 2001, Accounting and Finance, fifth edition, Continuum London and New YorkPour, 2011, Identifying different sources of Finance To Plc Advantages and Limitations, available at http://www.academia.edu/466098/IDENTIFYING_DIFFERENT_SOURCES_OF_FINANCE_TO_PLC_ADVANTAGES_AND_LIMITations [12 March 2014]Riley, 2012, Financing using an overdraft, available at http://www.tutor2u.net/business /finance/finance_overdraft.htm [10 March 2014]Riley, 2012, Sources of finance – retained profits, available at http://tutor2u.net/business/finance/retention_profit.html [11 March 2014]Thomas, 1999, Un Introduction to Financial Accounting, third edition, McGraw-Hill Book Company EuropeYakhshibaev, 2011, Sources of Short-term Finance and Investment Opportunities, available at http://economics.journals.cz/documents/Vol2/Untitled18.pdf [10 March 2014]