In this chapter, we analyze alternative sources of short‐term financing, as well as useful criteria for managing them. We start by considering criteria for selecting optimal debt maturity structures. Next, we present alternative sources of short‐term debt, such as bank financing, factoring, asset‐backed securities, letters of credit, commercial paper, and bankers' acceptances. We continue by describing the typical covenants established around debt contracts. Finally, we discuss the optimal number of creditors and the objectives that a firm should consider in order to make this particular choice.
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