This is definitely a grey area that is provision of
money. Money can take form in three ways: capital, finance and supplier credit.
Should we place these under key partners or key resources?
The litmus test is how provision of money is directly
related to the production function. And how the providers of money should be treated
in business model? My take is they should be treated as key resources because a firm marshals finance
not only for its operations but also to undertake marketing too. In sum, finance
is a lifeline in operating a business as a whole. Here we go describing these
providers:
Capital
providers: Let us call
them in a collective word: Equity. They are the risk takers who have put their
money on the future potential of a business. In a business model they are like low
men on the totem poles. If the business model fails they are out of the money;
if it succeeds they are in the money.
Finance
providers: Banks,
lending institutions, leasing & finance companies are the main providers of
finance in a business model. These offer term loans, overdrafts, credit lines,
leasing and finance packages. In addition to these there are government
institutions that offer finance for exports and technology. A business can
borrow from the market issuing debt instruments by way of a prospectus or by
private placement.
In every case where such finance raising takes
place the owners of these instruments must be treated as finance providers.
Typically finance providers support the business operations informally in
creating and delivering value and formally in value capture. Yet another grey
area is supplier credit where key suppliers give firms fairly extended credit
to finance the working capital requirements. Such supplier finance or line of
credit must be treated as finance providers and bunched under key resources.
Cheers!
Muthu
Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business
Strategist
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