By Jul 16, 2020 External CFO News Tax Advice & Planning

Budgeting for your Business in 2020

As a result of the global pandemic last years budget most likely didn’t pan out quite as you expected and forecasting for 20/21 may seem nigh on impossible.

It is more important than ever, though, to have a plan and a plan B and a plan C.

So now is an excellent time to start creating an annual budget, especially now the new financial year has already kicked off. You will need to be a little more flexible and ready to adapt as we move forward and if you haven’t done a budget before, there is no time like the present.

Simplifying the Process

To help you with this process I’ve put together a few steps you can follow.

Start by creating a template in excel or a CSV based on your profit and loss chart of accounts. Most cloud software such as Xero will enable you to export a budget template.

The model should be month by month and don’t forget to consider seasonality.

Remember to always be realistic in your estimates and if in doubt, be conservative.

Too often we see businesses set targets that are simply not achievable only to fall well below the expected results.

With the current level of economic uncertainty this is inarguably more challenging so you may be best served by mapping out a few different scenarios so you have your back up plans ready.

Finally, upload the final version into your accounting software so you can report actual vs. budget results.

Always remember to regularly review the results and make adjustments in your business to address any issues.

Additionally, during these unpredictable times, those in more volatile industries may prefer to use a rolling forecast whereby they can review and revise their budget monthly or quarterly in order to respond and adapt to the fluidity of the market.

Right now I do feel budgeting is an essential tool to help navigate our way through the challenges we are facing in order to come out the otherside in a strong position.

Keeping Co. is a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together to provide a complete solution for the Australian Small to Medium Business owner.

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained. We are here to help, contact us today.
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