Annual budgeting is a vital tool in assessing what your plans are, and making sure that resources are properly allocated. Some businesses prepare budgets over a longer period, although it can be difficult to plan in detail for a period longer than 12 months.
Budgets and forecasts may also be required by the bank or external investors, and of particular relevance here will be cashflow forecasting. It is a lack of cash which usually causes business failures, and therefore it is vital to prepare regular cashflow forecasts.
Making actual to budget comparisons during the year can help businesses make the right commercial decisions to achieve success. In year forecasting, and potentially forecasting 12 months or even longer into the future, can be a useful discipline to monitor performance and adapt the business to changing circumstances. In an ideal world rolling forecasts can be prepared each month.
James Cowper Kreston's outsourcing team is experienced at working with businesses to help them with their budgeting and forecasting processes. Sometimes this is a detailed involvement in the production of budgets and forecasts, and in other cases we review and challenge budgets and forecasts prepared by management.