When you create your company's budgets you know they need to have your basic expenses and that you need to balance them against your income so you come out with a profit.
But these aren't the only elements you need in a budget. In fact, if that's all your budget contains, it may be ineffective.
To help you create truly effective budgets, we're revealing the five key element every budget should contain...
Your budgets must contain these five elements
Element 1: Fixed expenses
These are the expenses you know your company will incur every month. These include expenses such as rent, insurance and salaries.
You have to account for these expenses first so you know you can cover them without fail. Separate them by highlighting them in a different colour.
Element 2: Variable expenses
These expenses change from month to month depending on your company's position and rate of sales. If your company sells less, your expenses, such as telephone costs, could decrease because of fewer sales calls.
Just because these vary from month to month doesn't mean they're not important so ensure you can account for them each month.
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Element 3: Once-off expenses
These aren't very important expenses and often you can choose when you incur them. For example, the expenses of servicing a company car is a once-off expense that you can choose whether you do it this month or next month.
Element 4: Fixed income
Fixed income is the guaranteed monthly amounts you get from regular clients. These are people you might have contracts with, for example.
Because you know you'll get this money each month, it's more reliable and, therefore, you can account for it first.
Element 5: Variable income
Variable income comes from once-off purchases from new clients. These are people who don't have contracts with you so you might never do business with them again.
If your budget contains these five specific elements, it will be effective every time.