Dealing with Unexpected Business Expenses

From broken down equipment to last minute energy bills, businesses often see unforeseen expenses that pop up at the worst possible moment. If you haven’t planned or budgeted for these expenses, it can have a big impact on your bottom line, and it doesn’t make you feel particularly good if you have to dive into your emergency fund.

 

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Last minute expenses happen to all of us whether we’re in business or not. But in a business capacity, if you don’t pay these expenses when the bill demands you do, you could impact your business credit. A quick bridging loan could help you out, especially if the expense means replacing equipment or a vehicle, but what else could you be doing? Below, we’ve put together a list of tips that you can use to prepare you for and handle unexpected expenses when they come your way.

 

1. Emergency funds. If you’ve experienced the pain of an unforeseen business expense, it may see an emergency fund as a waste of money. However, if you’ve had to tap out your emergency funds and you need to replenish them immediately, then a small business loan could help you out. Money can be put into business expansion and growth, and so it should be, but sometimes you need to have that backup wedge of cash to help you out. Emergency funds can help you to manage your business expenses as they pop in, but sometimes you may need to deal with those business expenses with your emergency fund.
2. Budget where you can. It’s not actually as easy as it sounds to just plan for the future. Budgeting is not the most exciting part of a business, but it is a critical component for continuance. When budgeting, you have to ensure that you cater for the unexpected, which again is not easy to do. How do you prepare for something that you can’t prepare for? Well, you prepare it by having an emergency backup fund.If the rent in your office building goes up, this could be an unforeseen business expense. But if you’ve planned ahead, you’d build up the possibility of a rent increase into your yearly expense forecast. This is a good way to plan for the future.
3. Make a list of potential surprises. A good way to deal with an unexpected business expense is to make a list of things that could become an expense, even if it’s not an expense right now. Some of the expenses that you’ll encounter can be more obvious than others. Taking the time to map out the unforeseen expenses that your business could be lumped with is a great way to get started. Every business has different expenses depending on the industry in which they operate, so it’s worth working with an expert in your field to get some insight. You could be looking at expenses for insurance, equipment, maintenance, professional fees, invoices, employee salaries, credit card fees. The list can feel endless, but it’s a good idea to keep an eye out for the best policies, payment terms and deals that can help you when the time arrives.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(amazon author page) amazon.com/author/kenboyd

(personal finance book/ self-published) 34 Stories That Explain Personal Finance