No one likes to think about a rainy day. When it comes to business, however, it's essential that you're prepared for anything. Your rainy-day fund—sometimes called an emergency fund—is the money you've set aside for unexpected expenses. These are costs that may arise when you least expect them but can have a huge impact on your business.

Not all businesses have a rainy day fund or business savings account, but having one in place is strongly advised because you never know when it will be needed.

Here are 5 reasons why you need a rainy day fund for your business:

1. You may be faced with an unexpected and urgent expenditure – If you need to replace a piece of equipment urgently, you don't want to be caught short and have to spend the time searching for the best deal.  If your longest-serving employee leaves, you want to make sure you have the cash ready for them so you can pay out their leave and long service leave entitlements.
2. You may not receive payment from a client on time – If you're relying on payment from a client and for some reason, they are unable to pay, that's going to leave a big hole in your finances and potentially unable to pay wages or other payments on time.  While you may be able to negotiate some payments, some are fixed to a certain date (like wages or loan repayments).
3. Your clients may not pay at all – It happens too frequently. You still need to cover your costs for the jobs you have done for them.
4. Your spending could exceed your expectations – Your costs could suddenly increase dramatically due to unforeseen circumstances - perhaps the cost of raw materials has risen suddenly or fuel prices have gone up. You could find yourself faced with an unexpected bill and no way of meeting it.
5. The cost of borrowing money is high – If you do find yourself faced with urgent expenses or lack of finance in general, it can be difficult to getting

All in all, rainy day funds are tools that will most likely help your business to grow. By having one in place, you'll be able to avoid the harm and financial loss that could result from an unexpected event. Do yourself and your business a favour by adding this tool to your small business toolbox today.

When you have a rainy day fund set up, it's also important to know the rules that you can follow, to enable you to draw this money out of the account.  For example, you don't want to purchase tickets for an overseas conference from your rainy day fund.  You want it to be used for a drop in income, or if a big customer has failed to pay.

Work out what is an acceptable rainy day fund balance for your business and work towards having that account ready for you should you need it.