Planning is always important.
Budgeting the finances is an essential part of effective and responsible financial management
But why is it SOO important??
The big reason is..
Effective Budgeting and control are essential for the financial viability of your organisation because it reduces risk.
What is a budget?
In broad terms, a budget is a financial plan that estimates how much money will be made and spent over a set period of time.
Budgets can be used by individuals, families, organisations, and governments to help manage money and make strategic plans.
Budgets can help people avoid overspending, debt, and running out of money. They can also help people make smart decisions with their money.
Budgeting is an essential function in the long-term viability or survival of your organisation.
After working with over 1000 organisations over three decades, it is clear that the organisations with effective budgets have better understanding, control and viability than those that do not.
In detail, an effective budget reduces risk because it…
- Provides important information before the period starts
- Identifies potential financial problems before they occur
- Enables review of various options to determine the best plan
- Assists management:
- make better, more informed early decisions
- make less drastic and erratic decisions
- to better manage Cash
- negotiate better arrangements e.g. to potentially reduce costs
- Identify areas to be considered for more detailed analysis to enable possible improvement
- Provides a benchmark to measure performance against. This is called Control.
- To compare actual performance against the budget
- To help understand the reasons for variances to budget. An effective budget is based on assumptions. Actual results represent actual activities. Therefore, budget variances can be explained by assumptions that did or did not occur
- Enables more informed decision-making for the future
- Identifies areas of finances that need more detailed attention and those that do not.
- Enables approval for action and a performance review basis
- Once the budget has been approved, the activity that the approved budget is based can begin
- Departments, managers, committees and leaders also now have a financial basis for performance review.
- Divisional, event, department, location, property and consolidated budgets
- Budgets for different divisions, events, departments, locations and properties can be created and entered into Xero.
- These budgets can be consolidated and also entered into Xero
An effective budget is essential for effective & responsible financial management of an organisation.
Budget services Benkorp provides
Benkorp can assist your organisation’s budgeting process in a number of ways. These include:
- Upload the profit and loss budget(s) you have created into your Xero organisation
- Create Profit and Loss reports that include budget and variance columns
- We prepare a budget template, for the client to complete and we upload
- We prepare a draft first pass budget, including:-
- Initial email to explain process, and gather information about preferences/variables
- Prepare summary, parameters and budget template
- Send to client to review
- Client sends adjustments to the model
- Benkorp adjusts and returns to client to complete
- Client returns the completed budget to Benkorp
- Benkorp upload to Xero.
We hope this is helpful information for you.
If you have any questions or want assistance with preparing your budgets please contact us at [email protected], complete this support request form: https://www.benkorp.com/ask-for-support/ or call us on 1300 138 627