Budgeting & Forecasting

As the new financial year looms upon us, it is important for businesses to focus their attention on budgets and forecasts. So what is the difference between the two and why are they important?

A budget is typically an outline of your expectations for the coming financial period. It is where you want your business to be at the end of the period and estimates revenue, expenses and your expected cashflows. Budgets tend to be a micro analysis of the business.

Forecasting is an estimate of what will actually be accomplished and is regularly updated. It is a prediction of how the business will go based on the budget, actual financial results and current market conditions. It tends to focus more on strategic thinking, rather the micro analysis of the budget.

Budgets and forecasting are essential to any business in order to make well informed decisions. It sets targets for the business as well holding businesses accountable throughout the year. If you would like more information or would like assistance with setting your budget and forecast, please contact us.