Financial Emergencies—from natural disaster causing equipment damage to a social-media crisis- -are a fact of running a business. When you are facing unexpected business emergencies, short term loans can help you.
What are business emergency funds for?
The unexpected events that can throw your business into a bin are typical occurrences in the lifecycle of any industry. But, without an emergency fund, your business is vulnerable to losses.
There are unexpected events that can damage the credibility of your company from disgruntled employees to lawsuits filed by customers or suppliers. Natural disasters such as hurricane and earthquake can damage the physical assets of your company. By creating a business emergency fund, you can quickly respond to crisis and restore your business to its pre-crisis condition.
Why many businesses don’t have an emergency fund
Here are probably some reasons why you don’t have an emergency fund:
- Your business is in debt
Paying for an installment debt with accumulating interests can be expensive. If you cannot pay on time, you probably can’t pay spare a few dollars to put into your emergency fund.
- Your business is not doing well. If you’re not getting great returns in your investment, you might think it’s unreasonable to have several thousand dollars sitting around earning less than five percent interest in an emergency fund.
Alternative to emergency fund
A short-term loan is worth getting, even when your business is doing well.
There are various business emergencies that can cause havoc for someone who doesn’t have money for minor emergencies. For example, you just closed a $100,000 deal that will take your company 2 months to accomplish. You need $50,000 to fund it, so you used up your emergency fund.
What would happen if you run into some problems that cause an additional month of delay? You need money to cover the cost increase while keeping your promise to your customer. Without an emergency fund, you’re risking your company’s resiliency and credibility. That’s when short term loans save the day. You get the quick cash you need while you complete the project.
Some companies also get into financial glitches because of poor accounting. Errors in entries of small to large payments from clients or customers can damage the company’s financial health.
No matter how small the error is, any business can go to the brink wall when its accounting department does not present an accurate and reliable financial report. So, when you think the poor accounting practices of your company are slowly distorting the reality of your finances, it is time to fix it. While others are purely clerical, some problems may cause legal issues and conflict with clients. In doing so, you might be needing cash to settle the issues and keep them from escalating. Short term loans can help you pay for your financial obligations, while you fix the accounting mistakes and put an end into bad accounting practices in your organization.
A short term loan can also be used to take advantage of business opportunities, such as additional orders from walk-in customers and huge discounts on raw materials.
Do you need quick cash to solve problems or take advantage of opportunities for your business? NSW Mortgage Corp’s short-term loans can help you!
Call us today!
Written by guest writer: Agnes Toledo
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