Managing a Windfall of Money as a Business

  • Accracy
  • 26th Nov, 2023

Whether it's a new investor, a new loan, or maybe a boosted week of sales, extra cash is an opportunity to change the trajectory of your business. Before you start to put this money to work, put in some planning time to get the most of these funds. Here's some strategies on best uses.

Managing a Windfall of Money as a Business

Be patient

It can be incredibly tempting to start using your windfall right away. If you planned ahead of time, you're set to put the wheels in motion! But if you don't have a plan, your windfall can quickly be reduced to a breeze. Read more about everything you need to know on planning a business budget.

These opportunities might not come along often. Take the time to outline what you would like to spend the loan on. Consider opening a separate bank account for the funds to track how they're being used and how much of the amount you have left. This will let you stay on top of this money with no extra effort. If you need a refresher on opening up a business bank account, look no further than our overview!

Understand the tax implications

Once you have a plan for the funds, you should understand how this windfall may affect your business beyond the bank account.

Depending on where the windfall came from, it very likely will be taxed in some way. This could mean that the big amount that hit your bank account will cost you down the line. Don't be blindsided by an unexpected tax bill. Understand how this money can affect your taxes and put a little away to account for these costs.

If tax is on the front of your mind, learn about how Accracy can take it off your plate and make for the easiest tax filing experience.

Pay down debts

It might be that credit card debt that you swear you'll tend to next month or financing for a delivery vehicle, but these debts cost your business every month. Interest expenses can accumulate over the year and only come tax filing does it become clear how large the amount actually got.

It's worth evaluating your debt and how much it's costing you. When planning how to put your funds to work, you may find that the savings to be had on interest expenses outweigh the returns on investment elsewhere. Learn more about the benefits of reducing business debt and how to do so fast.

Invest in new assets

You may have a couple "If only" items on your wishlist for when you have more money around. Now's the chance to take a couple off your list.

New equipment is costly and can require taking out a loan to afford it. If this windfall offers you an opportunity you otherwise wouldn't have had, there's the potential for efficiency gains. This can reduce operational costs in the long run providing savings from that initial purchase. Whether it's a new computer or a renovation to a warehouse, these investments offer returns for years after purchase

Create a rainy day fund

Consider putting some money away in a savings account or similarly accessible place for it to gain interest. Cash flow management is the key to small businesses thriving long term. Smoothing out an influx of cash can keep opportunities open down the line or just keep you prepared for the unexpected.

A windfall can mean new opportunities for your business, but it's important to balance this with future possibilities. If you manage this cash correctly, it can sustain your operations in the long run and have you ready for any obstacle.

Additional resources

Get to know cash flow

Learn more about budgeting

Free 1 Month Bokkeeping Trial

New Customer Offer

We are offering free 1 Month Basic Bookkeeping to all new customers so you can experience Accracy's seemless and professional services.

* No Debit/Credit Card Required

Blog Posts

Tax Extensions Explained: How to Avoid Late-Filing Penalties and Stress
Tax Extensions Explained: How to Avoid Late-Filing Penalties and Stress

Learn the ins and outs of requesting a tax extension and avoid penalties. Find out how to ease tax season stress.

10 Financial Ratios Every Small Business Owner Should Know
10 Financial Ratios Every Small Business Owner Should Know

Trying to analyze your business performance? Here's how to calculate and evaluate ten crucial financial ratios.

Selling a Business: A Step By Step Guide
Selling a Business: A Step By Step Guide

When it's time to move on, here's how to sell your small business, step by step.

Ready to grow your business?