Links for Budgeting Tools

Here are a few places you may want to check out if you are looking for budgeting and forecasting tools:

Inc. offers a rundown of 12 tools that can make dealing with your finances easier:
http://www.inc.com/guides/2010/09/12-best-tools-for-budgeting.html

A few suggestions with contact information from ehow:
http://www.ehow.com/list_6768530_budgeting-forecasting-tools.html

Reviews of a number of frequently-mentioned tools: 
http://www.capterra.com/budgeting-software

Overview of the 10 most-recommended accounting tools:
http://www.softwareadvice.com/accounting/

SCORE is a great resource, and has plenty of advice:
http://www.score.org/finance

Tools for Budgeting

Business owners are bombarded with advertisements, introductions, suggestions, and other forms of marketing. Budgeting software is no exception. How do you decide which system will work best for your business?

Budgeting, forecasting, bookkeeping, payroll are all important when it comes to your business’ finances. Manually tracking all of those numbers would be slow and not the best use of time. However, choosing between the many tools available may seem overwhelming, particularly when there is so much marketing noise.

There are a few ways you may be able to make the process of evaluating various options a bit easier:

1. Discuss the issue with your CPA. As an expert, your CPA likely has insights into both what your needs are, and what is available. Ask for recommendations, and you will immediately narrow the list of systems to consider.

2. Decide if you want a web based or installed system. Each has advantages and disadvantages. Your situation will help you determine which is most suitable.

3. Talk to your staff. If the people who must use the software feel that their opinions have been taken into account, it is likely you will have an easier time getting it fully implemented.

As you begin to look at various systems, you will want to consider cost, technology, training and support, and your specific needs. Changing your processes will require an investment of time and effort, so carefully evaluating the options before making a decision could well save you money -- and headaches -- in the long run.

We will be happy to answer any questions you may have regarding budgeting tools.

Scalability as a Determining Factor for Outsourcing

 Several factors determine whether or not outsourcing specific tasks is the best option for your company’s needs.  Scalability is one of these.

At the core of the scalability factor rests the theory that you only pay for what you use.  This means that a small business can save a significant amount of money that would otherwise have been consumed by retainer costs.  Several advantages exist to working under a scalability model:

·       Allows for businesses to outsource only that portion of projects which may prove expensive to manage internally

·       Augment existing staff or services during identified high traffic or peak activity periods to better service clients and customers

·       Ability to draw on and access key expertise areas when needed for specific aspects of projects or services without having to absorb costs for that expertise full time and “in house”

Determining Scalability

Scalability, by itself, is a major factor in determining what to outsource and to whom.  The extent to which a vendor allows you to scale back operations can also influence the decision to outsource.  Other factors that influence outsourcing on the basis of scalability could include some of the following elements:

·       Scalability inherently requires some degree of automation.  A vendor with high investment in the latest technology and understanding of how to integrate business requirements with tools and applications is best suited to offer scalability.

·       Scalability may not be applicable to all processes; in services that are people driven, it may not be possible to scale back operations at all

·       Understanding how much to scale back, and when, can be determined only by a vendor with significant maturity or experience

·       An organization or a vendor offering scalability can demonstrate breadth and depth of services and have process – driven solutions with proven methodologies and strategies

·       Executing scalability requires the existence of quality infrastructure.  To ensure a steady stream of business continuity, it is essential that the documentation process be thorough and structure applied at all stages to ensure success of the project time and again

Scalability as a Reflection on the Vendor

A vendor who has invested significantly in training and coaching its manpower can ensure high returns for its clients by ensuring quality work.  The combined experience of efficient automation with experienced human resources and input positions a vendor to offer relevant client solutions, consistently and repeatedly.

Tips for Effective Budgeting

Budgeting is essential to every company regardless of size.  An effective budget helps with planning and is essential for reaching objectives and goals while preparing for difficult or unexpected financial situations. Here are 5 tips for creating an effective budget:

·       Budget should be for a specified period- The budget most often is based on the company’s fiscal year and broken down into monthly budgets. When creating the budget, consider the timing when both income and expenses will occur. 

·       Don’t try to budget to the penny-  Accurately predicting actual results is not the objective, it's about providing your company guidance for coarse direction.

·       Forecast your income and expenses- Review your current and historical financial data and project your income and expenses for a specified timeframe.  Income should include payments received from sales, interest, accounts receivable and other sources. For expenses, all expenditures should be included, such as payroll, materials, note payables, utilities and any other expenditure. 

·       Run budget comparison reports- This is often referred to as a “variance report." Comparing your budget with actual amounts earned or the expenses you incur will enable you to determine the corrections needed to grow your business.

·       Create profit and cash flow targets- Every budget should include profits and cash flow targets, because they are both bottom line measures that require different functions to control and manage them. Every year companies with very attractive profits go out of business for lack of cash.

Follow these five budgeting tips to create an effective budget for your business. Use your budget as a guide, and make corrections as needed to stay the course. 

Please tell us what you need to know! We welcome all suggestions for articles, interviews, or whatever else you might like to see in the next issue of Financial Matters. 

Forecasting vs. Budgeting for Small Business

Running a business presents many challenges, and there are financial practices available to assist in the planning and management of your company’s financial future. The use of financial forecasts and budgets 

 

can help you determine where your company is headed and how you can achieve your financial objectives and goals. People often use the terms "financial forecast" and "budget" interchangeably, but each provides distinct and essential functions. It is important to determine the functions of each in order to apply them effectively.

Forecasts - Make predictions or projections of expected revenue and expenses based on historical data, managerial expectation and foresight, and other factors into an uncertain future. A financial forecast seeks to predict a company’s financial position, cash flows, sales, expenses and other figures in the future. Forecasts are more flexible and will change as your company’s financial position and market factors change.

Budgets - A budget is a detailed financial plan consisting of a defined set of financial objectives that guide thedecision making processes and seeks to exercise control over the company finances and resources while guiding the company to where it needs to be. The objective is to insure that the company does not spend more than they are making in sales revenue. Often, adjustments must be made and are reflected in a “variance report." This report shows the budgeted amount compared to the actual amount realized. Budgets allocate money for specific purposes and are the objectives and goals set for the company.

Forecasting and budgeting are both financial practices that assist in preparing for a company’s financial future.  Typically budgets are prepared yearly, while forecast are prepared more frequently, usually monthly. Forecasts tend to change based on financial and market conditions, while budgets are more concrete.

It is essential for small and mid-sized companies to be aware of their finances at all times because one small operating error could spell disaster. That’s why it is critical for small and mid-sized company owners’ to forecast and budget. Knowing how much to spend and on what is the most important thing for a small business to stay solvent.

We are currently offering a free analysis of your forecasting and budgeting process. If you would like to learn more on how Alan Neal & Associates can help move your company forward, please call me at 423-756-4076 or email me at alan@alanneal.com
Alan Neal  CBA, CM&AA