Budgeting and managing cashflow
Budgeting and managing cashflow
Budgeting and managing cashflow are two of the most important tasks if you want to stabilise your finances and grow your business.
Managing the cashflow twists and turns of a project can be hard work. But it’s easier to do when you have an agreed budget and can track your spending and performance.
So, what’s the best way to stay in control of the budgets you’ve set? And how can you manage your cashflow position to make sure there’s always enough cash to fund the project?
Understand the costs of each project
Clear planning at this stage lays the foundation for successful budgeting and managing cashflow throughout your project.
Starting a project without fully understanding how much it will cost is a no-no. To keep on top of costs, overheads, staff expenses and general spending, you need at least a ballpark figure for this expenditure. In an ideal world, you’ll want to be as precise as possible with these costs.
Run through the project from start to finish and highlight every point where there will be costs to incur. It might be the cost of your raw materials. It may be the cost of buying new equipment. It could be the payroll costs for the people actively working on the project. Break everything down and come up with a total expense for the project. This is your starting point.
If you need help breaking down your costs, First Class Accounts Ovens & Murray can assist with project-based cashflow forecasting and budgeting support. We’ll help you understand what’s coming in, what’s going out, and when – giving you confidence in your numbers.
Set your budget and track it over time
Once you know your baseline cost for the project, you and your team should decide on the amount of funds to allocate to the budget. Your baseline cost is a starting point, but don’t forget to include extra for specific contingencies. What if the project overruns? What if your raw material costs go sky high? What if you need more people to get the job over the line?
Agree on a clear budget and set up your finance system to track spending against this budget. With a cloud accounting system at the heart of the business, it’s very easy to create a budget and then record and track your spending over time.
Our team at First Class Accounts Ovens & Murray are Xero-certified bookkeepers and app advisors. We can help you set up and integrate cloud-based tools to manage your budgets in real-time, track actuals, and provide accurate reports to support smarter decision-making.
Keep a close eye on budgets and project cashflow
One of the big things to remember is that a budget is not a static thing. You’ll obviously aim to stick to your initial costs, but prices and availability will affect the total spend over time. Because of this, it’s vital to not just write the budget and then forget about it.
Keep a close eye on your budget performance and the cashflow for each project. Being able to review this performance, in real time, should help you avoid overspending, or running out of cash for the project. And when the cash in the kitty is getting low, you can get proactive and look at ways to top up the budget, or rein in spending in other areas of the project.
We support business owners with regular cashflow reporting and cash vs profit insights to help you stay informed and avoid surprises. If cash is tight, we can help identify where changes need to be made to keep things running smoothly.
Take action to maintain your positive cashflow position
Balancing the cashflow scales on a project isn’t easy. But when you spot that there’s a potential hole in the budget, the important thing is to do something about it, pronto!
Running any project with your fingers crossed that ‘it will all work out in the end’ is a recipe for disaster. And with such detailed budget reports and cashflow forecasts available with today’s finance apps, there’s really no need to be disorganised about your spending.
Think about:
- Setting up key metrics for each project, to measure spending, cashflow and progress
- Run worst-case and best-case cashflow scenarios, so you’re prepared for anything
- Regularly reviewing your spending and looking for areas to make savings
- Taking on finance facilities to plug any cashflow holes as they appear.
With the right systems and support in place, budgeting and managing cashflow becomes a smoother, more proactive process for business owners.
With First Class Accounts Ovens & Murray, your bookkeeping and payroll needs are fully covered. From budgeting through to managing payroll for project teams, we provide a reliable, contract-based service that keeps everything accurate, on time, and aligned with compliance requirements. If you're based in Albury Wodonga and need dependable support to manage your business finances, we’re here to help.
Ready to get proactive with your budgets?
- If you’re thinking about scaling up your established startup, please get in touch.
We’ll help you build solid, workable budgets that can be easily tracked through your accounting system – and support you every step of the way with accurate reporting, done-for-you bookkeeping, and real-world advice that makes a difference.
