Budgets & Forecasts

Budgets & Forecasts are critical to a business’s well-being and success.  To complete budgets and forecasts requires a unique skill set.  

Prior to starting the process, it is assumed that the business has accurate and timely financial records.  That’s a given.  If you are not sure, see my Hierarchy of Financial Needs.

There are a number of ways to approach budgets and forecasts.  It is possible to simply add a certain % increase (or decrease) from last year’s actuals.  Sounds simple, however, that type of budget is next to useless. 

To get the most out of your time the budgeting process requires a lot more thought and insight.  Business needs focus, with a clear understanding of the various influences that drives performance.  We approach budgeting using the “bottom-up” methodology.  That is, where each part of the business is logically thought through.

There are many factors that need to be taken into consideration such as

·       the faster the business is changing the higher the business risks  

·       budgets typically are for a 12-month period

·       completing rolling 90-day cash flow forecasts

·       greater awareness and appreciation of lead and lag measures

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Many components of the business need to be monitored typically through a series of Key Performance Indicators (KPIs).  These KPIs (not only financial) need to be well thought through, showing a greater understanding of what factors drive the business and what proactive action is required. 

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If you are wanting to have a great understanding of your business financials and what factors drive your business call me today.