The Impact of an Effective BudgetWe work with a number of our clients throughout the year, small, medium, large and non-profit, to develop effective budget forecasts, independently, or as part of our professional Tax Agent services for business and taxation planning.
When working with our clients to develop these strategies, many will ask 'why'? What are the merits of investing in a budget for my business?
A budget is a means of defining your business goals for a set period of time in financial and monetary terms. A budget is a future estimate of performance, income, expenditure, profitability and position. It provides your business with a means of comparison when the actual performance of the business is reviewed.
Budgeting encourages forward thinking; assists with defining and coordinating roles and responsibilities with your business; provides a framework for operations; set standards and benchmarks for achievement; improves clarity surrounding decision making, by providing comparative performance indicators; and assists with control and prompts where corrective action and decision making is required to make changes.
We undertake a variety of budgeting activities with our clients which can include some or all of the following:
- Cost of Sales - either by product or service or a combination of both - are your margins on sales high enough to cover your input costs?
- Breakdown of Sales Mix- what are you selling, is every line profitable or do you need to re-structure or diversify?
- Profit & Loss Budgeting - where are you spending money unnecessarily?
- Balance Sheet Budgeting - what is your current debt position? Do you have too much debt, or could you leverage more to develop your business?
- Cash flow Budgeting - cash flow planning can be an extremely useful tool for assessing where cash flow stress occurs in your business, and how make changes to improve cash flow
- Taxation Planning - it is critical to understand your taxation positioning throughout the year, to ensure you are on track for end of financial year taxation planning.
If your business requires advice or assistance in preparing budgets for your business, please do not hesitate to contact us on 9022 9726.