Cash flow and budgeting are important management tools which allow businesses to properly manage their performance.
Each performs different functions enabling businesses to make informed decisions based on the data and information provided by them.
Business owners, especially as we look forward to a new financial model in current times, should be forming cash flows and budgets now to allow comparison of performance and planning.
Budgeting provides business owners with greater control. By looking at unfavourable variances, for example, you can decide to control waste if costs are too high, increase marketing activity if sales are too low or improve efficiency if production is under par.
Proper budgeting allows you to plan future strategies, set new targets, and enhance motivation as everyone works towards achieving these.
You should ensure that you work with your cash flow forecast on a monthly or quarterly basis.
A local business owner and Flex Capital client said, “In recent times our business has been severely impacted by COVID-19 however we have been able to work more closely with Flex Capital on our cash flow and budgeting to look at areas of improvement. Knowing our business is the most important thing – Flex Capital not only knows our business but understands us.”
There are more upsides than downsides to having in place effective cash flow and budget reporting. Imagine what great shape your business could be in at this time next year!
Use the current COVID-19 time to lock in your cash flow and budget. Then stream the information from both year-round to keep your business on track.