In the workshop, we learnt that it is crucial to understand the difference between running costs and investments. Both types of expenditure play an important role in your financial planning, but have a different impact on your liquidity.
Running costs - the daily expenses
Running costs are expenses that are regularly incurred to keep your business running. These include rent, wages and material costs. These costs must be covered in order to ensure day-to-day operations.
Investments - long-term assets
Investments, on the other hand, are one-off expenses that you make to acquire long-term assets, such as machines or software. These usually have higher initial costs, but offer added value for your company in the long term.
Why the distinction is important
The distinction between running costs and investments is important because they have a different impact on your financial planning. While running costs need to be financed regularly, investments help you to expand your business in the long term and remain competitive.
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