An annual budget is a must for any business serious about setting and achieving goals. It forms an integral part of the Business Plan. The objective of a budget should be to get the owner or manager and key staff focused on where the business is Now and Where you want it to be in the Future, whether it be in a year, 5 years, 10 years and beyond.
The Budget is an important business tool. It is the bridge or the road map for how you are going to achieve the business goals and objectives allowing you to set targets and measure performance so that decisions can be made effectively & timely. Without a budget, the business has no real focus point and will therefore have little indication if or when it runs off course from its goals.
A budget should be formulated to identify sales targets based on at least two scenarios:
- Based on breaking even (nil profit or loss) but factoring a commercial salary for the owners; and
- Achieving a targeted but realistic profit for the year.
Finally, the major aspects of the budget should be used to benchmark against actual results on at least a monthly basis. Our KPI Monitoring System can assist businesses to ensure they stay on track and focussed.
If you would like to know more about how we can customise a budget to meet your business’s needs, please contact us on (02) 9531-0922 or complete the inquiry form below.
Cash Flow Forecasting
A Cash flow forecast is similar to a budget except that it attempts to forecast cash flow movements including debtor receipts, creditor payments, ATO payments, loan repayments, and capital outlays while attempting to predict bank balances in the future. It facilitates more responsible management of cash resources, debtor collections and assists with decision making concerning future financial outlays or commitments.
A Cash Flow Forecast is also critical for businesses that experience large fluctuations in trading or rely heavily on cash to fund current and future business activity. Some examples of businesses that benefit greatly from cash flow forecasting include any business in building & construction industry, manufacturers, importers and wholesalers.
Finally, there is little point forecasting cash flow if it is not monitored regularly and updated for actual results and balances. This can be a time consuming process but if done effectively, it can help the business through difficult times and even prevent financial problems.
If you would like to know more about how we can assist your business to better manage cash flow, please contact Brett or Matt on (02) 9531-0922.