Budgeting & Forecasting
Unfortunately, most business owners are focused on “today” issues:
How much money is in the bank? How much do people owe me? And how much do I have to pay?
Whether due to time constraints or limited resources, this style of management does not lead to real success.
Creating and implementing a sound planning, budgeting and forecasting process helps organizations establish more accurate financial report and analytics–potentially leading to more accurate forecasting and ultimately revenue growth. A sound budget and forecast will allow you to:
- Quickly update plans and forecasts in response to new threats and opportunities
- Identify and analyze the impact of changes as they occur
- Better plan and predict cash flows
- More accurately manage sales pipelines while tracking performance against targets
- budget specifically for growth and having confidence in how much can be spent
Planning, budgeting and forecasting are a key element to helping your business reach its long-term potential and overall goals.
Planning, budgeting and forecasting is typically a three-step process for determining and mapping out an organization’s short- and long-term financial goals:
- Planning provides a framework for a business’ financial objectives–typically for the next three to five years.
- Budgeting details how the plan will be carried out month-to-month and covers items such as revenue, expenses, potential cash flow and debt reduction. Traditionally, a company will designate a fiscal year and create a budget for the year. It may adjust the budget depending on actual revenues or compare actual financial statements to determine how close they are to meeting or exceeding the budget.
- Forecasting takes historical data and current market conditions and then makes predictions as to how much revenue an organization can expect to bring in over the next few months or years. Forecasts are typically adjusted as new information becomes available.