Financing from other capital releases is a form of Internal financing. It can be done as:
Rationalization, in which a reduction in the capital employed is effected without a reduction in the production volume or the sales volume, e.g. B. through improved material disposition or more advantageous manufacturing processes. This frees up funds that can be used for other purposes.
Asset reallocation, in which tangible and / or intangible assets are converted into liquid form in order to be available for financing purposes. One also speaks of substitution financing. It does not lead to an extension of the balance sheet, but from a balance sheet point of view it is simply an asset swap. The reallocation of assets should only relate to assets that
- have a high liquidity value
- do not lead to any significant repercussions on the credit volume
- cause little or no book loss
- do not lead to a reduction in performance.
As internal liquidity reserves, securities held as current assets are best suited for reallocating assets. The amount of liquidity reserves should be based on the other options for securing liquidity.
The sale of other fixed and current assets often turns out to be problematic. The shedding of stocks for internal financing purposes should only be seen as an emergency measure. Sales of systems can lead to losses and endanger the operational readiness.