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Saving for a rainy day

Not only do we aim to save our personal earnings but as a business it is a great idea to save some profits in case of the “worse case scenario” or a rainy day.

Some companies use profit to re invest back into the company, this may be to purchase new equipment or materials. They may use it to recruit new staff or to pay bills ahead of time. Either way this money invested increases the value of the company.

This is a great way to build and expand but what if you need to purchase something quickly or have a major issue where you have to move premises due to flooding or fire?

Invoice discounting and factoring, as we discuss on a regular basis, is a great way to gain capital from the money tied up in invoices. This money can be in your bank within 24 hours and can be used for a variety of things that can help a company grow. Many small and medium companies in the UK have turned to factoring as an alternative method of funding and have found it incredibly quick and simple. Compared to the lack of funding from the banks, factoring lenders only charge a minimum percentage of the amount of money lent through factoring.

So if you have managed to collect invoices that hold a value of £100k but don’t need to use all the money, it is a sensible idea to either invest back into the company or place in a high interest business savings account. If you do this every time you use factoring, you will be on your way to saving an incredible amount which is the worst case scenario does happen you are safe in the knowledge that you have been scrimping a little nest egg together that will get you out of trouble when needed.

 

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