11/24/2023 0 Comments Budgeting and forecasting![]() For example, if your business takes in daily sales from many different customers, create a monthly forecast. This could be monthly (most common), quarterly or yearly, depending on how your business handles billing. This allows you to plan for every scenario and have a 'Plan B' and 'Plan C' if you don't achieve your ideal results. If your business is facing uncertainty, you could create a range of forecasts based on different outcomes. You should then revise your forecasts for the rest of the financial year, considering where your business is heading. Review and update your forecasts at the end of each month when you compare your actual trading results with your original budgets (variance). These extra payments or receipts must be included in your cash flow forecast. If you anticipate any cash shortfalls, you will need to plan how to cover your costs. Talk to your accountant or financial adviser for help to prepare a forecast and manage your forecasted cash flow. To create a forecast, use the data from your budget, along with previous and current business trends, to estimate what those profits will be. It provides a basis for your financial decisions, using actual data for the financial year, and can be used to develop future budgets. Forecasts are more dynamic than budgets, so update them regularly as your revenue and expenses change. It is an estimate of what your results and profitability will be. Prepare a forecastįorecasts use actual sales and cost data to show where your finances are headed. This will allow you to compare them later and refine future projections. You can compile your profit and loss budget in the same format as your profit and loss statement.
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