Manage the Most Important Budget of All: Your Own
In the aftermath of Budget 2016, I thought it topical to write about what really affects business owners in the day-to-day operational running of their business. Top of the list of challenges are managing your budget, maximising cash flow and making informed business decisions based on current financial information.
Some business owners have trouble accurately forecasting their business expenses and revenue figures or predicting cash flow as well as managing debtor days etc.
If you are a little like this, then perhaps investing in budgeting software will help. Getting to the granular detail and accuracy of budgets will help you create, finesse and stick to your budgets for every month/quarter etc.
Budgeting software will help you get a better sense of your actual performance rather than an estimated performance. It will enable you to make better decisions for your business when you know your own budgetary requirements.
Let’s look at what budgeting software can do for your business:
- Provide Insights
With looking at excel, you see numbers. But often times, not in context. Accounting or budgeting software will help you gain insights that you previously couldn’t see or it would take too long to do. For example, you can easily see:
- Your least and most profitable service
- Items that aren’t selling well
- Stock that is incredibly popular but you don’t have enough of
- Sales forecasts for the next quarter
- Create Instant Reports
Each accounting or budgeting software can produce reports for you, where you can see in a very quick way, how you are performing. Here are some favourite reports that clients of ours are surprised to get in an instant:
- Aged debtors/receivables
- Aged creditors/payables
- Income/ turnover per client
- Expenses per client or cost centre
- Income per unit or profit centre
This is just a flavour of what information you can get, in addition to profit and loss management reporting and cash flow reports.
Remember whatever accounting package you get for budgeting and forecasting, you must follow two simple principles:
- Get a Package that is Easy to use
Choose the accounting software that is right for you. If it’s not easy, if it’s not visually appealing, if you find it difficult to get around, then don’t buy it. You or your team will find every excuse not to use it and that is not good.
- Consult your Accountant
Often times, clients come to us and don’t share that they have an accounting software package for fear that we’ll think we aren’t needed. On the contrary, we welcome clients who use accounting software.
We recommend Sage but work with a number of different packages. We can extract all the relevant data from the software and sit down with our client to do a KPI & Business Health Review. We review past performance and can prepare forecasts based on future performance because the information is all there and available to us.
So consult with your accountant, whether it’s us or someone else in order to get the relevant advice based on your own business requirements.
In summary, regardless of the size of your business, if you are in control of your own budget, cashflow and sales, then that’s the budget that really matters.
If you would like further information on any of the above, we would be delighted to speak with you.
AG Associates is an accounting practice that specialises in affordable accounting and payroll solutions for the SME business owner. It also offers training on accounting software. For further information please contact Angela at Unit 11, Eastgate Way, Little Island, Cork. 021 4824723 or angela@agassociates.ie