Biz Blogs

Discover more about ERP and business management
technologies, as well as recent news, trends, and innovations.

Significance of Financial Budgeting

Budgeting is the most effective way to manage your business performance and finances. It not only provides a guideline for expected income and expenses to compare your anticipated financial goals with actuals but also allows you to invest in new opportunities at the appropriate time.

Budgeting is the most effective way to manage your business performance and finances. It not only provides a guideline for expected income and expenses to compare your anticipated financial goals with actuals but also allows you to invest in new opportunities at the appropriate time.

A budget will help you:

  • control your finances;
  • fund your current commitments;
  • make informed financial decisions and meet your objectives;
  • ensure that you have enough funds for your planned expense & projects;
  • create a financial target that individual teams or the company, as a whole, can aim for.

Why does your business need a budget?

With an effectively drawn budget, you will be able to:

  • monitor your business performance;
  • manage funds effectively;
  • allocate appropriate resources to projects;
  • define your goals clearly;
  • make better business decisions;
  • proactively identify problem areas such as the need to raise finance or cash flow difficulties; and
  • Of course, plan for the future!

How to create a budget?

Here are a few things you need to keep in mind while creating a budget:

Timeframe: Depending on your business type, you would either budget monthly, quarterly or yearly.

Fixed costs: Start listing your fixed costs. Fixed costs are those that are not dependent on the level of goods or services produced/provided by your business. Expenses such as rent, wages (indirect such as for administrative staff which is not influenced by the level of sales), property taxes etc. would fall under fixed costs.

Variable costs: Next, list your business’s variable costs. Variable costs would increase or decrease depending on your company's production volume; they rise as production increases and fall as production decreases. Expenses like costs of materials, components or subcontractors to make the product or supply the service, all make for a business’s variable cost.

Consider the following expenses which are sometimes overlooked:
Depreciation, Debt repayments (interest), property rates, service charges, telephone & internet costs, printing, postage and stationery, vehicle expenses, equipment costs, advertising and promotion, subscriptions, donations, travel and accommodation expenses, legal and professional costs, including insurance.

You can project the budgeted expenses by averaging past expenses in each category. You may want to split your budget up between different departments such as sales, production, marketing etc. to track various expenses more accurately.

Income: Once you have listed all your business expenses for the period, it’s time to forecast how much income you will generate from the sale of your products and services. This can either be recurring which is your regular revenue, such as contracts or subscriptions, or generated income which is a prediction of future income that your business is likely to earn.

Actual: At the end of each period, record the actual income and expenses against each category. Finally, you need to calculate the difference between the two –as a figure and one as a percentage.

Analysis: Once you have recorded the figures for income and expenditure, it’s time to analyse the data. If your business budget is not in-line with the actual numbers, it is important to identify and assess the reasons for the variance. If you notice that it is a recurring expense, you should consider budgeting for this expense in the future.

It is a good practice to revise your budgets throughout the year to ensure that the YTD budget is meaningful. This is particularly important if you have forgotten to account for a particular expense or if you make more than the projected sale.

Make time for budgeting

Invest time in creating a comprehensive and realistic budget to manage your business effectively. Make sure you monitor and asses your budget regularly to make sure that the company is not overpaying for economic resources.

Use last year's figures to get an idea of what your revenue and expenses could look like in this period.  To import last year’s budget into this financial year on your accounting software, follow these steps:

MYOB Advanced:

Budgets in MYOB Advanced can be found under Finance >> General Ledger >> Workflow >> Budgets. To copy a previous budget, export it to Excel using the export button on the page.

  • If you want to make changes to this budget, you can do so in the excel file and then save it.

     

  •  You can now import this to the current financial year. To do so, select the current period>> import the saved file using the import function.

     

MYOB EXO:

Go to Utilities >> General Ledger Utilities >> Set Up/Maintain GL Budgets >> New budget >> Copy Last Year’s Actual Values >> Ok

 

 

 

Sybiz Vision.NET:

Export last year’s budget to Excel and then import it back to the current financial year. To do so, go to General Ledger >> Utilities >> Budget Export.

 

 

 

  • Choose the Source Year and the Target Year on the Export Screen >> Next >> Finish.

 

  • To import it back, go to General Ledger >> Utilities >> Budget Import >> Choose the Budget Year on the Import Screen >> Next >> Finish.

 

 

 

 

 

It's also essential to consider your business plan and any changes in operations as it will affect your budget. Also, factor in any growth or reduction in both income & expenses that you are expecting. With rising costs, it is important to consider CPI increases for the appropriate expenses. Make sure your budgets contain enough information for you to easily monitor the key drivers of your business such as sales, costs and working capital.

Speak to us today to know how your accounting software can help you manage your accounts. 
Contact us!

Table of Contents

Elevate Your Business Success with MYOB Acumatica

Join the ranks of successful businesses across WA and Australia that have benefited from our MYOB ERP solutions expertise.

 

Latest Blogs to Know More
About Business Management Solutions

[gravityform id="3" title="false" description="false" ajax=true tabindex=49]
[gravityform id="4" title="false" description="false" ajax=true tabindex=49]
Scroll to Top

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

Thank you for your interest!

Please check your email for the downloaded file.

Should you require further assistance, don’t hesitate to contact one of our expert ERP consultants.

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

Thank You for Registering!

Your Seat is Reserved for the TRAILD Webinar

We’re excited to have you join us for the upcoming webinar on “Streamlining, Automating, and Protecting Your Accounts Payable with TRAILD”. 
 
The webinar is scheduled for August 18, 2023, from 10am to 11am Perth Time. 

What's Next?

You will receive a confirmation email shortly with the webinar details and a calendar invite. Please check your spam folder if you don’t see it in your inbox. 
 
If you can’t attend live, don’t worry! We’ll send a recorded version of the webinar to your email once it’s available. 

Questions?

If you have any questions before the webinar,
feel free to reach out to us at:

admin@alphabiz.com.au

We look forward to seeing you at the webinar!

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

SIGN UP HERE TO DOWNLOAD

Experience the MYOB Advanced Difference

Explore tailored MYOB Advanced demos demonstrating how these ERP solutions uniquely enhance your business processes. 

Please fill out your details below to get started

Schedule Your Free
No-Obligation Consultation

Discover how our tailored solutions can meet your specific business process needs. Submit your information below, our MYOB Advanced expert will reach out to you: 

Get started today

Embark on your journey towards streamlined delivery management with AlphaPOD. Easy integration, customizable features, and dedicated support await. 
 
Please fill out the field below:

SIGN UP HERE TO DOWNLOAD

Thank You for Registering!

Your Seat is Reserved for the Webinar

We’re excited to have you join us for the upcoming webinar on “Prepare for Mandatory Two-Factor Authentication: Essential Webinar for MYOB Acumatica Users”. 

The webinar is scheduled for
22 August 2024, from 10:00 am to 10:45 am AWST

Keep an eye on your inbox for the confirmation email, which includes all the details you’ll need to join the session. If you can’t attend the live event, no worries—we’ll send you a recording afterward.

Questions?

If you have any questions before the webinar,
feel free to reach out to us at:

admin@alphabiz.com.au

We look forward to seeing you at the webinar!

SIGN UP HERE TO DOWNLOAD

Thank you for reaching out!

One of our specialized consultants will be in touch soon to assist with your query