Business budgeting has long been acknowledged as one of the fundamental keys to sound financial management.
Granted, some very small businesses may only ever produce a budget under pressure, or to obtain funding from a bank, but as businesses grow then accurate and up to date budgets become extremely useful indicators of how well (or otherwise) a business is doing. Many business experts would argue that without a working budget, management decision-making is random, to say the least.
At a very basic level, budgets include income and expenditure, but as businesses grow budgets are likely to grow in their complexity. A master budget will include the overall operating budget as well as the financial budget, but in many instances, the ideal scenario is to be able to drill down further to look at the breakdown of these budgets in micro detail. Irrespective of what sort of business you run, the chances are you have your eye on a whole host of financial “balls” that are in the air at any one time. The likelihood is that you have a range of key budgets in operation day-in and day-out, all of which act as mini barometers on your business performance at any one moment. After all, it’s only by setting these budgets and comparing them with actual performance that you’re going to be able to assess with any accuracy how you’re doing.
Irrespective of whether you set and manage the budgeting alone, or in conjunction with your accountant or business advisor, wouldn’t it be ideal if you could get an up to date, birds eye view across your budgets, simply at the press of a button?
It may be that you want to keep an eye simultaneously, on your monthly cashflow; your cumulative cashflow and your expenditure and income. Or perhaps you have different regional or departmental factors at play which impact on how well (or otherwise) your overall business is doing? Being able to see how one budget affects another is crucial to the overall management of any successful business. Trying to do this, at worst with pen and paper, and at best, with a spreadsheet would be time-consuming and deeply frustrating, to say the least.
No matter whether these budgets are co-related or are completely independent of each other, knowing where you stand with each and every one of your selected key performance indicators is essential when it comes to keeping your finger on the pulse of your business success. In the current climate, having constantly updated and accurate best and worst case scenarios for your business could mean the difference between success and failure.
If all this is starting to sound complicated, rest assured, there is light at the end of the tunnel.
Xero has recently introduced their new tool to create and associate multiple budgeting, enabling you to easily create best and worst case scenarios and keep a close eye on them on a real time basis. These, as well as regional and, or departmental budgets can easily be set up from your Xero profit and loss account. It really couldn’t be much simpler to stay ahead of the game.
If you’re in the process of reading this and thinking that your business would benefit from this facility, but you don’t currently have access to it, why not contact us? At The Smart Accountants we can show you how you could be keeping your finger firmly on the pulse of your business in less time than you’d imagine.
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