Futureproofing is a necessity for your business in a world of uncertainty. Plan
So, what are budgeting and financial forecasts, and what is their importance in future business planning?
Budgets are tools companies use to establish goals like growth, future trends, or experiences of a company. It allows management to assess where the business is heading and quantifies future expected revenues for achievement. Budgets are set for a specific period, once, twice, or quarterly.
In contrast, financial forecasting estimates the amount of revenue/income more frequently and examines whether the proposed timeframe set in the budget will be met or not.
How does a more challenging economy affect your business?
- Current customers stop buying
- Fewer enquiries or leads
- More challenging to make a sale
- Customers return less often
- Customers spend less on each visit
- Increase in cost of stock
Whether collaborating on accurate forecasts, fine-tuning your budget, or planning predictive business modelling, you will face daily business challenges.
Budgeting and financial forecasting should work in tandem with each other – the budget creates the baseline to compare actual results and determines how far those results vary from a business’s expected performance. Financial forecasting determines how companies should allocate budgets for future periods.
What is involved with setting budgets and forecasts?
- Profit and loss – annual and periodic
- Working capital – debtors, stock and creditors
- Finance – asset purchase and loan repayments
- Cashflow – allow for drawings and tax
Ever wished you could look into a crystal ball and see what the future holds for your business?
Your business is your most powerful asset, so why not future proof it today by contacting registered chartered accountants Drumm Nevatt & Associated Limited?
Call the team at either their Howick or Tauranga office for your initial one-hour complimentary consultation today.
Phone: 64 9 534 4382
Email: firstname.lastname@example.org Ridge House
69 Ridge Road Howick Auckland 2014
PO Box 54 060
The Marina Auckland 2144
Phone: 64 7 576 2194
Email: email@example.com 23 Myres Street