Budgeting, forecasting and planning – Where are you now, where are you going and HOW are you going to get there?
When it comes to planning, budgeting and forecasting are you “milling around in the dark” and hoping for the best? A case of “I don’t know where I am, I don’t know where I’m going, and I have no idea how I am getting there!”
How does this make you feel? Frustrated, overwhelmed and anxious?
If you consider a road trip, most times you have a plan! You consider where you are, where you need to land up and of course the best route you’re going to take to get you there!
The same principle applies when it comes to the financial side of your business.
You may have heard the words “Planning, Budgeting and Forecasting” thrown around, you KNOW you need to do them, but you are not sure how to do them, or you may be unsure of how to do them effectively!
What is planning? Understanding the goal and creating the steps on how to get there.
What is budgeting? Understanding how much money you have to allocate to attain that goal.
What is forecasting? Predicting your future finances based on past data and current expectations
For more information visit our Blog on Budgeting and forecasting to make better decisions here.
The challenges in planning, budgeting and forecasting vary from industry to industry and business to business.
In general terms the challenges are having a consolidated overview of the following:
– Knowing what work is coming up.
– Understanding the expenses are associated with that work.
– Having a timeline of invoicing and expected date of payments.
– Knowing the overheads and expenses associated with all aspects of the business.
Once you have identified the figures associated with the challenges you are able to set a realistic and achievable budget for the coming weeks, months and year.
Having a regularly updated forecast enables you to take into account current factors and plan accordingly.
You know where you are going and what you need to do to get there.
This ensures that you do not waste time and money by heading off in the wrong direction.
Is Your Bookkeeper playing their role
Your bookkeeper should play a key role in assisting you with planning, budgeting and forecasting your finances by
- Certainty: keeping your records accurate and up to date so you have certainty around where your finances are.
- Plans: work with you to see “where you are, where you want to go and how to get there”.
- Budgeting: work with you to assist you in coming up with an achievable for the year.
- Forecasting: work with you to understand past and current data to ensure you make the best decisions for your business.