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Budgeting for success: the importance of good financial management

When you’re operating and managing a small business, you have a finite pot of cash to work with. Because of this, it’s incredibly important to manage your cash well and to have clear budgets and spending limits for every area of your business operations.

Let’s take a look at why budgeting is such a vital part of your financial management, and what you can do to keep your company on budget and in a positive cashflow position.

4 ways to stay in control of your business budgeting

It’s impossible to run a successful business without having a tight rein over your expenditure.

Sales may be bringing in healthy revenues, but the income and profits you’re generating can quickly be eaten up if you’re overspending on operational costs, marketing campaigns, staff payroll or investments in new hardware and software.

We’ve highlighted four ways to put good, solid budgeting at the heart of your financial process:

1. Embrace the power of budgeting

A well-crafted business budget gives you the foundations to become a financially healthy and successful business that’s in control of its spending.

You don’t have to use a complicated budgeting app; a simple breakdown of income and expenses in an Excel spreadsheet can be a great starting point.

To get started:

2. Track your budgets, income and spending

Setting the budget isn’t the end of the process. It’s important to track all income and expenses and to update your budget in line with the current health of your business finances.

Using the latest cloud accounting software can work wonders. These cloud tools help you record your incoming and outgoing transactions in real time, so you can work with the most up-to-date numbers and financial data when reviewing and reworking your budget.

To improve your tracking:

3. Separate your personal and business finances

It’s tempting to think of the money in the business as ‘your money’. But it’s crucial to have a clear divide between the company’s money and your own money, as an owner and director.

Here’s why that separation is important:

4. Forecast for the future: don't just track the past

Basing your budget and financial strategy on historic data is a great foundation stone. But you can also use this data to project the data forwards in time and create useful forecasts.

For example, you can:

Talk to us about getting on top of your budgeting

Financial management can be overwhelming, especially if you’re new to running a business. But don't be afraid to seek help from a qualified accounting professional.

As your adviser, we can:

  1. Streamline your record-keeping, bookkeeping and financial reporting.
  2. Give guidance on budgeting, forecasting and financial management.
  3. Ensure your cashflow and budgets are always looking positive and healthy.

Let’s sit down and talk about getting your budgets and financial management in order.

Contact Us Today.

Whatever your requirements, we can help you find the solution.

Unit 6, 1 Sigma Drive Croydon South, Australia VIC 3136

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