Budgets & Forecasting

Effective business budget planning and financial forecasting go hand-in-hand when it comes to your business’s financial future. Not only will both of these techniques influence the future financial decisions you make, but you will also be weighing up how certain actions will impact your business.

Business budget planning will allow you to channel the direction your business is going and will assist you in creating goals that will show how your business grows. But most important is the overview it will create that will allow you to see the performance of your company and what is affecting your growth.

We find that a lot of business owners have a very relaxed approach to managing your finances, and don’t feel a budget is necessary. But you plan properly, you CAN DREAM BIGGER. By budgeting you can manage your cash flow better which will help fund these dreams. It would help enable you to take new opportunities at the correct time.

budgets and forecasting

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Why would a business need Budgets & Forecasting?

Your budget is a roadmap to the direction you want to take your company. A financial forecast is the assessment that shows if your business is reaching your goals or not.

Budgeting can sometimes change, so it’s important that it should be flexible and updated often. Budgeting and forecasting should also work together. For example, financial forecasts and insights thereof should be used to evaluate your business’s budget.

When your business is growing, you may not always be able to be hands-on with every part of it, so your budget is an important tool that will help you take control of your business’ spending.

How do you know that you need a budget for your business?

By budgeting you will be able to see your current available capital, an estimate of your spending, and what you will possibly earn in future. If you keep your eye on your budget, you will see how your business is doing and you will be able to manage your cash flow so you can spend your money correctly when you need to to develop and grow your company and reach your strategic goals. You will also be able to manage your cash flow, reduce your running costs where possible and better your profits and returns on your investment. A budget is also a great way to see what the priorities of your business are.

What is a budget?

Budgeting is to outline the expectation of revenues that a business wants to achieve for a certain period.

A budget is something that is used to monitor the finances in your business, it shows if you can fund your current financial commitments, meet your objectives and it enables you to make confident decisions about your cash flow and to do financial planning for the future (investments & expansions).

A budget will include estimates of the following; revenues and expenses, cash flows & debt reduction. If you compare your budget to your actual results you can see what variances you have and how you need to adjust your budget.

What is a financial forecast?

This is when we do a forecast that is an estimate of the revenue or income your business expects to generate in an upcoming year/period. It’s a way of trying to predict how your company will perform in the future. We mainly use income statements to do this. We take the historical data and we analyze it so we can anticipate future results. Ideally we need to look at the entire financial model which will include all the financial statements. 

How does the Digital CFO™ create budgets and do forecasting?

At Digital CFO™, we approach this process as your quarterly gameplan. Therefore, an outline of how the business expects to generate revenue, based on expenses and non-cash items, such as budgeting for taxes to be saved up, debtors, creditors and depreciation of assets, over a specific time period. Through financial forecasting, we will determine where your business is heading based on past, current and expected future conditions.

Trusted small business budgeting and forecasting solutions to make your business thrive, available in Sandton, Bryanston, Johannesburg, Heidelberg and across South Africa.

We assist with forecasting for your business to determine viable budgeting, decision making and overall financial strategy, driven by the goal to enhance your financial outlook as well as to help you achieve your financial and business goals.

Added to this, smaller businesses benefit from our small business budget services as they can focus on growing and improving their business, while at the same time getting trusted, expert advice to help them successfully manage their finances.

Your business’s financial future needn’t be based on uncertainty – let us help you navigate the route to making your business thrive.

Our three step process

Step 1

We do a quick consultation on what your needs are in terms of an accounting partner. Or we can do a short analysis of your business and help you establish your needs.

Step 2

We suggest an implementation plan & solutions that suit your industry and business model. We offer you a blueprint when you onboard on how your business could run as effectively as possible.

Step 3

We start streamlining your processes and systems, from where we can give you some advanced reporting. We teach you how to read the numbers and gain insight on how to manage your finances more effectively.

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Our services

Accounting is the interpretation and presentation of that data to business owners and investors.

Accounting typically consists of:

  • financial statements and reports

  • budgets

  • tax returns

  • analysing business performance

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 Bookkeeping focuses on recording and organising financial data. Bookkeepers working for smaller businesses might do some basic accounting duties. 

Bookkeeping typically consists of:

  • payroll

  • invoicing

  • receipts and bills

  • recording business transactions

A budget is an estimation of income and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis.

And Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends.

Business management focuses on the organising, planning and analysing of business activities that are required to efficiently manage and run a business.

Financial management is strategically planning how a business should earn and spend money. This includes decisions about raising capital, borrowing money and budgeting. Financial management also involves setting financial goals and analysing data.

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A debt collector is a company or agency that is in the business of recovering money owed on delinquent accounts.

A financial statement is a report that shows the financial activities and performance of a business.

There are four main types of financial statement:

  1. Balance sheet: a snapshot of your business’s financial condition at a single point in time, such as 31/12/2016. Shows your business assets, liabilities and owner’s equity at that time.

  2. Profit and loss statement: also called an income statement. Shows your business’s revenues, costs and expenses over a period of time, such as 1/1/2016 to 31/12/2016.

  3. Cash flow statement: also called a statement of cash flows. Shows changes to the cash coming into and out of your business over a period of time. Only records cash (not all income). Shows whether you can cover short term expenses like bills and payroll.

  4. Statement of changes in equity: also called a statement of retained earnings. Shows changes in the equity of your business for a set time period. In other words, changes in how much money your business keeps (rather than pays out to shareholders).

Combined, these statements provide a good view of the financial health of your business.

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Payroll is the compensation a business must pay to its employees for a set period or on a given date.

Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional or national.

A compliance officer is an employee of a company that ensures the firm is in compliance with its outside regulatory and legal requirements as well as internal policies and bylaws.