Budgeting is key to ensuring that businesses are profitable and that projects are effectively implemented and successfully led to completion.
Having clear corporate budgets offers many advantages for businesses in general, and for startups, in particular. On one hand, it helps segregate personal funds from business funds, hence separating the respective financial liabilities; on the other, it helps manage a company’s dues and expected payments to ensure liquidity and an optimal cash cycle.
Following are 9 tips that will help you better manage your corporate budgets and drive bottom-line results to your business:
Define your scope and set your deadline
Defining the scope of your work will ensure that efforts are always targeted to achieve the objective and that areas outside the scope are not included in the project. With a clear scope, it is easier to identify the existing constraints and achieve the project’s objective accordingly. While setting a clear deadline by which to finalize the project’s budget will help you prioritize and focus only on what’s most important.
Let the past guide your future
In order to make the best estimate of forecasts, use historical data as your base and fine-tune that based on current/expected business developments, key directional changes, needs, and other contextual factors.
Update your budget as you go
Always remember that your budget is just a forecast – it should be regularly updated along the year and whenever the need arises, especially when there are strategic shifts in the business and/or market.
Keep your financial statements in check
Regularly review your financial statements – your balance sheet, profit and loss, and cash flow statements. Unlike what people think, these documents are not to be reviewed just once a year. They serve as the compass for the business and should often be used as a tool to track the company’s performance.
Involve the team in your budget
Keep in mind that a successful budgeting process is a team exercise. There are two key advantages to that: first, it will allow team members to understand the different parts and linkages of the budgeting process so that everyone understands how his/her part contributes to the final budget; second, it will give team members a sense of ownership within the budgeting exercise.
Manage your liquidity
Cash is always king. Consider requesting discounts instead of full payments or payments in advance. As cash is nowadays often problematic because of fraud and money laundering incidents, you can rely on payments directly through banks or cards.
Report your taxes on time
Remembering to pay your taxes on time will avoid you paying penalties and other unforeseen expenses. Setting up a yearly reminder to pay taxes and forecasting those expenses in advance has proven to be extremely helpful.
Budget for the unexpected
Plan for contingencies and build an emergency fund for unforeseen expenses or potential future investments. This could be done by systematically setting aside a monthly or yearly amount. Incremental savings can go a long way.
Keep in mind that under/over budgeting for a project is deemed as bad as not delivering on the project itself. At the end of the day, budgeting – whether done for personal or business reasons – is a way to plan for success. It helps consciously manage one’s expenses and gives a sense of control over one’s cash flow. With a better management of money, you free up your mind of tedious daily tasks and are able to focus on your big strategic goals.
About the author
MA certified Financial Crime Investigator with an entrepreneurial spirit, Sundberg has a strategic eye for details and the skill in managing personal and corporate budgets. She has worked in banking audit and compliance for several years before launching her own business. She currently holds an upper management position in a multinational contracting company and is the National Treasurer for JCI Lebanon.