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Budgeting: Should it help you control or plan your company's finances?

by , 04 September 2014
You probably wish you could control your finances 100%. It would make it so much easier to know exactly what expenses your business will have every single month.

Now most business owners think that this is what you use a budget for. It gives you the ability to control every cent and ensure no one spends more than they should.

But is this really the point of a budget?

Today we reveal the answer to that question...

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How to improve cash flow, analyse your financial statements and eliminate fraud in your company…

Here's what you need to know about using your budget to control or plan your company's finances

Planning involves developing objectives and preparing budgets to help you achieve those objectives. Budgets allow you to anticipate problems to establish potential strengths and weaknesses in your operations. 
Control involves the steps your management takes to ensure your company achieves your objectives.
If you use the budget to 'beat people' into shape, they'll start to play games. For example, they could increase expenses and reduce revenue. They'd do this because they know you'll change the budgets or force them to achieve unrealistic targets.
And that's why if you want to know exactly where you intend to go financially, the number one role of your budget is planning. 
If you make the mistake of controlling your staff members with your budget, you could end up with a budget that doesn't help you achieve any goals and will leave your staff members feeling demotivated. 
Remember your budget is a planning tool, not a control weapon. Use it effectively and your company will succeed financially.

PS. Here is an amazingly simple way to manage your financials, with the Master Budget Series

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