An effective budget should give a business the tools to track how the company is doing financially so it can plan for both short- and long-term expenses for everything from new hires to the cost of expanding operations. It can also give a company the ability to share its process and budget with a governing body, like a board of directors, and provide important status updates to current and potential investors.
Reduced Planning Cycle Times. Templates and workflows make it easy to gather inputs and assumptions.
Accurate Information. Pre-built synchronization with NetSuite ERP ensures real-time, accurate financial and operational data is used.
Align the Organization. All stakeholders are connected in a single environment, eliminating emails and spreadsheets.
Increased Transparency. Everyone is entering data consistently and using the same processes, so all changes are tracked.
Improved Forecast Accuracy. Regularly compare and analyze actual versus projected results to refine forecasts.
Being prepared for emergencies. You never know what can come up in the course of doing business, so just as it is in personal life, it’s important to plan for the unexpected. A budget can help you set aside money in the event of an emergency so you don’t have to divert funds from another part of business operations instead.
Attracting investors. Investors want to see that a company has its dollars accounted for. A well-formed budget shows organization and a commitment to the business. When an investor sees budget sheets and can understand how much money the company anticipates bringing in and what its expenses are, they may have more confidence in investing.
Setting sales goals. Some expenses are associated with having a sales team or sales processes, and the budget can account for these. It can also include how much sales you expect the business to earn in a certain timeframe. With these items in place, you can set sales goals that align with the budget, adjusting as needed later on.
Meeting financial goals. Every company should have financial goals that, if reached, mean the company did well for the year and can continue operations as normal or even expand as needed. Without a budget in place, a business may not know how operations are doing, but instead discover at the end of the year that it didn’t turn a profit. A budget can keep a business and stakeholders on track to meet goals because there is a better awareness of where the money is coming in and being spent.
Paying off debt. Paying off debt is a major benefit of having a budget. It should include line items for each expense, with current debt being just one of them. As long as a business follows the budget and accounts for the monthly or quarterly debt payments, then it should be able to pay the debt off promptly.
Easily preparing taxes. Whether you do business taxes yourself or hire a professional, a budget can make it easier to complete this process. For example, you can invest in tax preparation software or have someone on retainer who can file taxes for you. Your budget will make their process go faster, potentially saving you money.
Making large financial decisions. Most businesses will be faced with large decisions that will impact the money moving into and out of the company. With a budget, you will likely find it easier to make necessary decisions like how much you can afford to increase salaries, if bonuses can be available for team members, what benefits you can offer employees or if there is the opportunity to increase operations.