Saving for a Rainy Day

By: Tom Heath

With the constant stories in the news that the economy isheading for a serious slow down, the pressures on businesses all over the worldare acute, and being able to handle any future economic problems is vital tothe survival of your business.? Despitewhat you might have heard in the news, it is never too late to prepare for theworst, and by taking a few steps now, you will maximise the chances of yourbusiness being able to weather the storm and come out stronger at the otherside.

The most effective way of preparing for any slowdown is toincrease your reserves of cash, and ensure that it is working as hard aspossible for you.? By putting a specificamount aside each month into a special , your company will soonbe able to build up a nest egg of funds that can be called upon in anemergency.?

By saving money in various operations throughout yourbusiness, you will be able to set aside more cash for tougher times. Review allyour regular outgoings and see which you can change.? Many charges for day to day activities such asdepositing cheques and handling payments, so look around for one that offersyou these services free.? With a businessthat handles a lot of cash and cheques, the costs of a current account canbuild up relatively quickly.

When you have sorted out your various arrangementsto make sure that you aren’t paying over the odds for services, and are gettingthe best return on surplus funds in your account, you should look at otherareas that can be rationalised.? Look atthe cost of any borrowing, and also review the payment and credit terms thatyou offer to customers.? Of course theearlier your customers pay will ensure that you have funds in your accountrather than theirs, and allow you to earn, rather than paying interest.

If you have the capacity within your business to create afinancial safety net by saving money each month on the cost of differentaspects of the commercial side of your operations and through carefullyreviewing the prices that you charge, you will be able to increase your overallmargins, and ensure that your company gets into a very strong financialposition.?

One thing that is essential to remember when puttingtogether any form of internal investment plan for your company is that youshould always bear in mind the current market reality and ensure that you donot over save – that is to say, you keep one eye on your essential outgoings tocover them in the event that you concentrate on how much you can put asiderather than how much you are earning on a day to day basis.

Whatever you do to weather the storm, remember that prudentplanning and a considered approach to your finances will have better long termbenefits for your business than making hasty decisions that could act againstthe interests of your company in the long run.


Money Management
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