What is: o cash flow with budget control is the detailed study and record of all the financial movements of the company or person and the constant glimpse of what such movements impact on the general budget. By monitoring all cash flow, inflows and withdrawals of funds for any purpose, it is possible to make a complete planning for the future, forecasting and controlling expenses and analyzing the budget frequently in order to anticipate shortages, failures or excesses.
Why do: Simple to plan, easy to use and paramount in the routine of any company budget control should be practiced by all those who care about monitoring their finances in detail and keeping their obligations and goals organized. It is also useful and recommended to companies of all sizes and segments and also to the individual as it produces important results that are crucial to financial decision making.
Advantages of budget control
It requires the recurring recording of the changes in the company's cash and, through this, helps to identify calculation errors and exaggerated expenses that deviate from the general financial standard.
It produces important results that help make future decisions. Through budget control it is possible to know the amount of resources available to invest in projects and in how long it will be possible to carry them out.
Helps to schedule fixed expenses with recurring expenses, such as employee expenses and monthly bills of energy and telephone, and advises if the available balance will be sufficient to comply with such commitments;
Advance information about spending limits and best dates for purchase;
Formalizes and monitors the performance of administrative actions and functions;
It obliges managers to expend effort in understanding and remedying unexpected situations that may reach the financial sphere;
Provides basis for performance evaluation.
How to do it?
The best and most practical way to guarantee a complete analysis of all your company's financial procedures, income and expenses without spending hours making complicated calculations and entering data repeatedly is by using spreadsheets. These tools and software developed specifically according to the characteristics and needs of your business will provide greater understanding of the primary information to maintain the financial health of any company.
There are on-the-market models developed to meet the needs of your company that are able to control revenue, expenses, cash flow and that make it possible to keep track of your company's finances synchronized to the budgeting process. It is possible to make a complete analysis of all the income and fixed expenses of the last months and to calculate, from these values, the forecast of gains and expenses for the next months. All this in a totally automated way, requiring only the insertion of a few data to update.
The possibilities offered by the use of these new technologies are numerous. It is feasible today to observe detailed data on financial transactions at the same time as they happen at the speed of a click. This gives the entrepreneur or administrator much greater control over elements so essential to business planning.
It must be remembered that the success of a company depends, in addition to good management techniques, of the tools that managers choose to use to accomplish their tasks. Efficient instruments made available to the manager directly alter the quality of the information collected and hamper management control.
If you liked this post, make sure to know our Budget Control Worksheet.