Accounting Tips: Plan for Major Expenses in Advance

by Greg DePersio

0 min read

Appropriating funds over time allows consistent distribution of cash flow. For instance, reserving 10% of your budget for five years has less of an impact than 50% in a single year. There is no downside to saving regarding financial reporting, as all assets set aside are still recorded on the balance sheet. Plus, cash set aside and invested for a few years can result in investment interest.

Saving in advance signals to employees, investors, and financial institutions that you are committed to the long-term plan. In addition, saving over multiple years enables your business to respond better to unforeseen price increases since more disposable income is available in the present due to historical saving.

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