2020 has proven to be a volatile year not only for businesses but for everyone across the world. While many factors can impact the success of your business, proper planning and budgeting plays an integral role in its success.
When managing your business’s finances, CFOs need to work with its management team in creating a business budget that is in line with the company’s fundamental financial structure so you can manage cash flow successfully. Business budgeting and planning helps reduce the uncertainty that businesses face when they are trying to forecast their expenses and cash flow, giving CFOs and top-level executives with a reliable framework by which to base their crucial financial decisions.
Therefore, getting your business planning and budgeting in order is crucial to help you prepare and navigate through today’s trying times successfully.
Review your budget from the previous fiscal year
Reviewing the prior year´s business budget is essential to create a good starting point in identifying your priorities and goals to make precise adjustments as necessary.
It is essential to look into your projections from last year and compare that with your actual costs.
Identify what’s different this year from last year
Is there any difference in how you operated the previous year? What were your capital investments then versus now? Have there been any changes in your production practices?
It is important to understand these to so you can budget and plan accordingly for the new year.
Make realistic assumptions for the coming year
Annual budgets usually consist of forecasted income and expenses. It is crucial to be realistic about your expected income and expenses. Being too conservative with your budget and failing to forecast your costs accurately can leave you with very unrealistic financial goals for the year.
Performance Canvas makes use of best practices, which include live forecasting, allocation, multiple assumption testing, and extensive what-if analysis so you can ensure you come out with a realistic goal for the year depending on various potential scenarios.
Make a Fixed Cost analysis
A fixed cost refers to the cost incurred by businesses and corporations that do not vary with the volume of production. Even if there are no products or services produced, your fixed costs remain the same. These fixed costs could include utilities, lease and rent payments, insurance, salaries, and other interest payments.
Because fixed costs do not change as often, a fixed cost analysis should give you a better idea of what you’ll need to prepare for the year and whether or not you’ll need to work even harder to break even.
A business budgeting and planning software like Performance Canvas gives you actual vs. budget comparisons based on an unlimited number of budgets and scenarios. You also get driver-based budgeting and rolling or live forecasting.
Use your budget
Once you have created a budget, it is crucial to stick to it and use it. Doing so helps you with cash flow planning, controlling costs, and managing risks effectively. As the year progresses, your costs will shift from expected to actual. This should allow you to assess whether current costs or revenue is below expectation or above your projections.
Performance Canvas Financials: The Complete Budgeting and Planning Software
Budgeting and planning help us make sound financial decisions throughout the year. This is why you need an excellent business budgeting and planning software that can empower you with all the financial capabilities you need to achieve your goals for the coming year.
Performance Canvas Financials is a complete budgeting and planning software that provides easy setup and implementation so you can save time and get on with budgeting and forecasting immediately to get your business ready for the future.
It is an add-on software to your existing ERP system, whether deployed on-premises or in the cloud. Examples of these ERP systems include Dynamics 365 for Finance and Operations, Dynamics 365 Business Central, Dynamics 365 GP, SAP, Epicor ERP, and many more.
If you’re looking for a consolidated platform that can help you cut your budget cycle time to half while providing an easy way for your finance team to collaborate, Performance Canvas is the perfect fit for your business needs.