Four budgets to control spending in your business…
The operating budget is the mother of all budgets. It contains a lot of smaller budgets that you can use. The question is – what is the best budget for your business? There's not just one answer. You first need to understand what the budgets actually do, before you decide on the one that's right for you. Here are four budgets that form part of the Operating budget.
1. A Cash flow budget helps manage and plan the financial spending of your business. It's a plan for saving, borrowing and spending money.
2. The Financial budget is a tool to help you plan your operations. It's a forecast of revenues and expenditures. It forces you to think about all the factors that could affect the profit or loss you'll eventually make. You can then decide well in advance on steps to take.
Keep reading for two more budgets you can use to control spending in your business…
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Two more budgets you can use to control spending in your business
3. A Sales budget's a way for your business to predict turnover the business will reach per period.
4. A Raw material budget will show you how much material you need for production – so you don't overspend.
If you want an in-depth look at these budgets, turn to your Practical Accountancy Loose Leaf where we have a chapter on each of these budgets, with examples and templates for you to get cracking on implementing them. Don't have a Practical Accountancy Loose leaf? Click here.
Until next time,
Product manager, Practical Accountancy Loose Leaf
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