Spontaneous financing exists because vendors and employees are not generally paid for their products and services immediately.

Question

Quizplus · Accepted Answer

Spontaneous financing refers to the financing that arises spontaneously from the firm's normal operating cycle, such as allowing vendors and employees to provide goods and services on credit, and paying for them at a later date. Therefore, vendors and employees are not usually paid immediately, creating a form of financing for the firm.

Spontaneous Financing Exists Because Vendors and Employees Are Not Generally