Financial managers must evaluate the appropriateness of capital expenditures. A. Everyday operation of the firm calls for careful management of short-term financial needs. For organizations with a poor credit rating or history of slow payment, the supplier may insist that the customer sign a promissory note. It is better not to borrow from friends and relatives. Entrepreneurs have come to rely less and less on family and friends for funding.
Banks are highly sensitive to risk and often reluctant to loan money to small business.
The most promising ventures are some times able to get bank loans. The person in charge of finance should keep in close touch with the bank and see the banker periodically. How much a business borrows and for how long depend on the kind of business it is and how quickly the merchandise purchased with a bank loan can be resold or used to generate funds. Sometimes a business gets so far into debt that the bank refuses to lend it more funds. Often the business fails.