8. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill th h means of short-term financing or long-term financing. Both methods have their advantages and disadvantages. Firms use a variety of short-term financing sources to support working capital. Use the descripti. itify the short-term financing source. Description Continually recurring short-term labiilities commonly generated from unpaid wages of taxes taxes An obligation backed by collateral, often inventories or accounts receivable 8. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfil their capital requirements through means of short-term financing or long-term financing. Both methods have their advantages and disadvantages. Firms use a variety of short-term financing sources to support working capital. Use the descrip ie short-term financing source