Budgeting is an important part of any business, but is often put on the back burner when things get hectic. However, budgeting is another important tool that helps business owners exercise financial control and avoid trouble down the road.
To budget effectively, you should:
- Set targets – define your objectives in financial, marketing, quality, and people terms.
- Keep accurate books – a reliable, easy-to-use accounting system is the key to straightforward effective financial control. If you aren’t comfortable doing your own books or do not have the time, consider using a service such as AccountingParadise.com who can handle it for you at a nominal fee.
- Check monthly – review your books and your bank statements monthly to make sure your business has enough liquidity to get it through the coming months.
- Manage cash flow – by using a monthly cash flow statement you are able to more effectively manage your accounts payable and receiveable. By controlling your debtors and creditors carefully you ensure better control over your working capital.