Planning power part 2: Big payments!
Author: Russell SmithAugust 13, 2012
Ever noticed that just at the point where cash is ticking over nicely, you’re making a bit of a surplus and cash pressure is starting to ease and then WALLOP, along comes a big invoicethat you have to pay to throw your cash out again!
Its usually the unexpected big payment that is the killer. For example, a recruitment fee, a large tax bill, IT investment, a piece of equipment that breaks down.
The irony is that all of this shouldn’t be unexpected, it can all be planned.
If your business relies on people then recruitment fees should be provided for every month. A large tax bill creeping up on you is avoidable if you get the info to the accountant and they are proactive (like us!!). IT investment can be planned out with your IT supplier and equipment WILL break down every so often and again, should be provided for.
So when you are doing your annual budget, after you have recorded all the usual expenses, make sure you give some time to asessing some of the big payments that could come up so that you avoid those big surprises.