2016-11-09 00:00:00 Expenses English Discover the reasons why it is advantageous to set aside money over a long period of time to plan for major expenditures. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214853/workers-install-expensive-brewing-tank.jpg Accounting Tips: Plan for Major Expenses in Advance

Accounting Tips: Plan for Major Expenses in Advance

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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.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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