Create a Budget and Allow For Your Business Cashflow
Creating a budget is an essential part of any business. When you are first starting out this is a major part of your initial business plan. A budget helps you track the financial health of your business while at the same time allows you to allocate funds to different items and activities. Using your budget, you can make better business decisions and set appropriate goals.
Budgets do need to be updated at regular intervals. The interval which is appropriate for your individual business is determined by many factors including the type of business you run, the effects of external factors (like COVID-19) and the accuracy of your estimated expenses and income. With time your figures and budget will become more accurate, as will the goals you set, thus your budget can be updates less regularly.
During your budget period you need to monitor how your actual income and expenses are progressing compared to your budget. A good time to do this is at the end of each month. This can easily be done by using the figures recorded in your Accounting and Bookkeeping system, which are used to generate regular reports. To find out more about our Accounting and Bookkeeping Services please click the button below.
When you monitor your actual figures, as compared to your budget figures during the budget period, you will very quickly pick up any issues as they arise. This will allow you to refine your goals and make any appropriate changes to your business operations well before these minor inconsistencies turn into a major issue.
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Having a budget is crucial to your business, however you also need to consider when you receive actual payments from your customers or clients, and when you actually need to pay your expenses. If these factors are not allowed for, there may be times when you may not have the cash available to physically pay your expenses, especially when unplanned expenses arise and when your income is affected by external factors, like at present with COVID-19. This is all allowed for through Cashflow Planning. By using Cashflow Planning you can track money flowing in and out of your business on a monthly and annual basis. This information is then used to establish payment cycles and any seasonal trends during which you require extra cash in your bank account. As a result, you will always have addition cash available to cover all your expenses.
So, do you have a budget and have you allowed for cashflow planning? If you would like to discuss how we can help you with your budget and cashflow planning or you have any questions at all, we are always happy to answer them obligation free. Please contact us now by ringing (03)9864-1885 or if you prefer you can email us at firstname.lastname@example.org or simply fill out and submit the Contact Form on this page. Once we understand your situation and have answered all your questions, we are happy to provide you with a personalised free quote!