In business economics, self-financing or internal financing is understood as the set of financial resources that companies obtain by themselves without resorting to external financing sources, that is, they do not come from new contributions from partners, nor from increases in the debtor position, but are generated by the company. The main sources of self-financing are retained profits and amortization.

In general, self-financing is also spoken of outside the business world to refer to the financing of people or institutions that do not need to resort to loans or debts to carry out their activities.

One of the most common classifications of business financing sources is the one that differentiates between internal and external sources, depending on whether the financial resources have been generated internally or come from abroad. Self-financing is defined as the creation of new financial resources by the economic unit itself. Once the result of the exercise is obtained and the economic agents that participate in the production process are remunerated, the rest will be freely available to the company. Self-financing benefits the structure and operation of the management system and incorporates future advantages for all participants. The most important consequences of this form of financing are the reduction of external dependence and financial expenses. Self-financing can also be considered as the part of the profits or resources generated that remains within the company, that is, retained earnings, amortization funds and provisions.

Depending on whether all or part of the components of self-financing are considered, the following concepts can be distinguished:.

The difference between revenue and costs is profit. The application of the benefit is usually the following: a part will remunerate the partners or shareholders, in the form of a dividend, while another part remains in the company and is dedicated to self-financing. This part of self-financing is called expansion self-financing.

Withholding profits can be done voluntarily or compulsorily. The retention of profits may be explicit in accounting in reserve accounts or latent or hidden arising from an undervaluation of assets or an overvaluation of liabilities.