• Why should I bother with a budget or cash flow forecast?
• How can I make sure there's enough money to pay my staff and myself?
• What's the right price for my product or service?

Businesses, particularly small ones can really struggle with managing the financial aspects especially meeting compliance deadlines for taxation and superannuation. 

Do you want to be in the position of having a tax debt?  Or not being able to pay your staff on time?

Budgeting (and cash flow forecasting) can be the difference between growth and sustainability or chaos and failure.  But where do you start? What do you need to include in a budget and cash flow forecast?

Before I answer these questions, let’s look at what each of these is in more detail.

What are budgets & cash flow forecasts?

A budget is an estimation of revenue and expenses over a specified future period and a means to track your progress.  These are usually created each year and referred to each month.   A cash flow forecast shows money coming in and out and the timing of it.  For example, you may invoice for one month but receive payment in the next month.  It is generally reviewed and adjusted on a weekly basis.

Why do I need them?

These tools keep us organised and give us something to aim for.  Each of these provides us with a framework to work with and help us avert issues like a cash deficit.   They also allow us to take advantage of new opportunities as these appear enabling us to grow our business and our wealth.

Banks, lenders and grant providers will also request you provide a budget and cash flow forecast when applying for funds to support working capital, purchasing assets and for project grant applications.

How do I put them together?

Putting together a budget and a cash flow forecast can seem complicated and daunting. But it really doesn’t have to be.  You just need to have a framework, some boundaries to work within and a template to complete.  Here’s some things you can do:

• Determine the number, frequency, and pricing of your offerings.
• Identify various expenses, including staff, rent, subscriptions, travel, utilities, and office-related costs.
• Break down your cash flow forecast on a weekly basis, while outlining your budget on a monthly and yearly scale.
• Create a checklist for all essential elements and document the assumptions you've relied on.
• Utilise a pre-designed budget and cash flow forecast template for enhanced organisation and efficiency.

- enter all income and expense categories for the year by month.  Total this by category, month and year.
- You may need to have separate sheets showing how the monthly figures come together (eg: x number of services @ $Y price each)

Now, how do I use them?

There’s not much point putting together a budget and cash flow forecast unless you are going to do something with them.  You’re just wasting your time!

So, how do I use each of these finely crafted documents?

Budget

With the budget you would want to:
- Add the budget to your accounting software
- Run a Profit and Loss report each month
- Compare your budget to the actual outcomes

Now you can then adjust for current and projected future outcomes.

Cash flow forecast

In the cash flow forecast you need to:
- review your cash coming and out of your bank account weekly
- compare this to the previous week’s forecast
- update your bank account opening balance for the week
- adjust your forecast for cash coming in and out for current and future weeks

From my experience, this can be a quite a challenge for many businesses, particularly smaller ones and not-for-profits. That’s why I created an online course with a simple but structured approach to budgeting.

The course takes participants through:
- understanding why we need a budget and what we need to include
- creating a robust budget and using it to make decisions
- how to monitor progress and cash flows in the business 

It’s quite comprehensive. So, participants can get assistance from me to plan the budget and review it as an extra to the course.

I always say that without a budget and cash flow forecast, you are doing things blindly!  So, will a budget and cash flow forecast save your business?  I truly believe it will!

So, what can I do now?

Book a 15 min chat to discuss how the Budgeting online course will help you create a budget that works for your business.

You’ll determine what revenue you’ll need to pay your staff, pay yourself and pay your expenses.  And, you’ll have cash flow to grow your business!  Click the link below to get started!

https://bit.ly/HPA15mCall

The post Will a budget and cash flow forecast save your business? appeared first on Higher Purpose Accounting.

Firstly, identify what activities you will undertake and break these down into revenue earning or cost incurring ( or investment) and determine the time frames for each type.

Next, review each of these and make adjustments on a periodic basis  to measure the impact on the business.  Having a yearly budget together with a cash flow forecast, regular reviews and re-forecasts will give you a solid foundation towards financial success.

If you would like assistance with any or all of these areas, arrange a consultation with me now using the details below:
www.higherpurposeaccounting.com.au

The post Get the planning and monitoring right appeared first on Higher Purpose Accounting.