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Seven tips to effectively use your cash flow budget in the day-to-day running of your business

by , 18 June 2014
A budget is a vital business tool. It's your way to create a financial plan for your business income and expenses.

But budgets are more than just a planning tool for predicting financial problems. They can help you manage your business finances on a day-to-day basis.

If you want to ensure you get the most out of your cash flow budget, follow these seven tips to effectively use it in your business...

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Get the most out of your cash flow budget with these seven tips

According to the Practical Accountancy Loose Leaf Service, to get the most out of your cash flow budget you must:

Tip one: Revisit old budgets
You can use old business budgets to spot problems and patterns before they become a financial nightmare.

Tip two: Do research and investigate
Get people in different departments involved in budgeting. Ask them about the needs of the department. This will ensure you include all the important expenses in your financial budget.
 
Tips three: Time cash flows for receipts and expenses properly
If debtors pay when you don't expect them too, it could throw off your budget. To stop this from causing chaos with your company budget, time how long it takes individuals to pay their debts.
 
That's what you should do before you even start planning your cash flow budget. So what other things should you then add to your budget? 
 
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Tip four: Include Vat on payable and receivable transactions in your cash flow budget 

This can help you determine if you must register for Vat.
 
Tip five: Make provisions for expenses you're aware of (even when you don't know the exact amount)
This will help you understand the effect the transaction has later on.
 
Tip six: Budget for SARS expenses such a provisional and income tax payments
This will help you avoid nasty tax complications.
 
Tip seven: If you base your budget on last year's one, remember to consider inflation
Inflation will push all your expenses up each year and forgetting this will be a big mistake. 
 
If you use these seven tips, you'll reap all the benefits of an effective cash flow budget in the running of your business. 


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