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Ready, Set, Budget!

Posted 26 Nov '21

There’s no doubt that having a business cash flow or budget can have a significant positive impact on your business. In fact, according to Be the Budget, “budgeting is important because it helps you control your spending, track your expenses, and save more money”.  Generally, most people will consider having a household or personal budget but sometimes look past the consideration to have one for their business.

Having a cash flow and budget in place for your business is a great way to gain a full perspective of your finances while also putting your mind at ease. In short, budgeting takes the guesswork out of managing your business’ finances!

Businesses without a cash flow or budget often fall into bad habits and sometimes nasty debts before they are even aware that there may be a problem.

The Benefits of Having a Cash Flow & Budget:

  • Peace of Mind and Relief
  • Ability to Budget Strategically
  • Clear Knowledge of Any Overspending
  • Comprehensive View of What you Can Afford
  • Allows You to Become More Proactive and Confident in Your Business

Did you know any business unable to meet their debts when they are due are technically operating and trading insolvently? Cash flows and budgets are important, because they predict whether the inflow of cash exceeds the outflow of cash. That is, it prevents you from falling into accidental debt. As you can imagine, this is essential for the future of your business because it allows you to make sure you have enough money to pay your debtors, employees, and operating costs!

One of the biggest issues Australian small businesses face is the lack of an organised cash flow.

We understand that it might be daunting to even know where to start in getting yourself a business budget. However, with the right professionals on your side, it can be made comprehensive and easy.

What is the difference between a cash flow and budget?

Cash flow is like a budget on steroids. A budget will consider your income and expenses, a cash flow digs deeper and considers the timing around when you will receive the money in and when you are required to pay the money out. Budgets often focus purely on income & expense items whereas cash flow will consider loan repayments, ATO repayments, superannuation payments for employees and capital injections you might obtain to grow your business.

A budget will give you insight into how many sales you need to make sure you are generating a profit where a cash flow will assess whether you have sufficient funds in your account to pay your bills, debts, employees, etc.

Why is this so important for small business?

Understanding the concept of budgets and cash flow is crucial for businesses who want to stay on top of their finances and continue to grow and thrive.

Financial insecurity can cause a great deal of stress and anxiety on business owners and even managers. As such, having a clear cash flow will take away any uncertainties you have about your inflow and outflow of money.

Ok you’ve convinced me, how do I get one?

Empire Accountants offers a service to prepare a budget and cash flow for your business. We will go through any historical data we can get our hands on (i.e. your Xero file) but also have a detailed discussion to consider any growth plans, challenges, opportunities that may be in your future which should be considered into this plan.

Don’t worry, we won’t leave you hanging to interpret the numbers by yourself! We will then have a meeting to go over every item within your report to ensure it aligns to your business plan and you understand how it all works together. Whilst this service will product a financial plan for you it is such as great educational tool for business owners when we go through the process.

Once we have agreed on a budget to work towards, we can then upload these numbers into your Xero file so you can easily track actual vs budget regularly.

The Money Mindset Shift

Knowing your numbers has this magical ability to shift our perspectives about money. They make us more efficient at achieving our financial goals while also opening our eyes to the exact steps we need to take to make that happen.

Here at Empire Accountants, it is our experience that businesses who have cash flows prepared show a significant increase in savings, sales, and profitability. It changes their perspective about what a healthy and thriving business looks like financially.

Once the plan has been established, we encourage our clients to meet with us on a regular basis. This allows us to compare “actuals” versus “projections” and revise anything that may be adjusted.

Overall, we have experienced positive transformations in our clients’ perspectives about money. Many start out passively managing their finances and, after receiving going through this process, move towards taking actionable steps to budgeting and improving their business.

Would you like clarity and peace of mind when it comes to your business’ finances?

Our professionals at Empire Accountants are experienced and eager to help you with this for your business. Reach out today to discuss the products we have available which we can customise a solution specifically to your needs.

So there you have it –….Ready, Set, Budget!

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