Finance is one of the most crucial aspects of a company. Without adequate financial planning, a company could go bankrupt. Therefore, a company could develop, grow, and be more successful with good financial planning.
Financial planning refers to the in-depth analysis of your company’s financial status, resulting in economic data that your company can use to design a strategy to achieve measurable objectives.
There are four objectives companies look for in financial planning: capital structure and requirements, financial policies, and how it can maximize the use of its financial resources.Â
The needs and goals of every company are different, and a financial plan does not follow a “one-size-fits-all” model. That is why a company has to have its unique financial plan. There are many ways to make a financial plan that’s effective for your company, and one of them is by using Accounting Software.
Besides making a financial plan, Accounting Software can also help your company manage and track its financial progress. To ensure you make a good financial plan, continue reading the article below. Â
Also read: Accounting Software Implementation to Improve Your Business
Table of Contents
Tracking Business Budget
Before creating your company’s financial plan, you must track its budget and expenses. This process is important because knowing how much funding your company has and how much it’s spending can help you manage its costs better to increase profit.
Knowing this will also help your company manage its potential deductions and taxes. Below are some tips for tracking your business budget and expenses.
Use business financial accounts
Knowledge about business finances can be blurry for some businesses. To solve this problem, your company can open business financial accounts for all business purchases it makes. This tool can help simplify your business finances and even give rewards. You’ll need to open a business chequing account, a savings account, and a business credit card.
Store receipts
Keeping all your company’s transaction receipts with their purchase purpose is a good idea. With these receipts, you can tell what, why, and when a transaction happens. You should keep paper and digital receipts in case your company needs them for emergencies.
Use a cloud accounting softwareÂ
Before using Accounting Software, companies use a spreadsheet to track their business sales and expenses. Now, companies can access their accounting data through their mobile.
With this system, you can easily insert, track, and manage your company’s finances because it automatically records every transaction and its details. Using this system helps your company manage its taxes and gives your company more data security.
Making Budget Goals
Having enough budget is important for a company because it determines if it has enough money to run operations and expand the business while also getting a profit. Without a budget, a company might spend more money than it is taking in or not spend enough for it to continue growing. Making budget goals is easy. Follow the steps below to make a good budget plan.
- Check the industry standards: research the industry you’re running and your competitors.
- Construct a spreadsheet: a spreadsheet can help you estimate how to allocate your raw materials and other costs.
- Leave room for flexibility: although you have a revenue estimation, not all expenses can be fixed or controlled. So it is best to make sure you have more than enough money before making any big decisions.
- Prepare for cut costs: your company has to prepare for when money is tight. When your company needs to pay its bills, it could consider cost-cutting.
- Review your business periodically: a lot of expenses could come unexpectedly. Therefore, reviewing your business is important to ensure it has enough funding.
- Shop for services or supplies: one way you can save money is by finding new suppliers that match your company’s budget. Â
Also read: Business Accounting Software – Stay on Top of your Revenue
Review Your Planning
You should regularly review your company’s financial plan to ensure it’s still on track toward its goals. When a company has to review its financial plan depends on the condition of the company.
Still, it would be best if you did it at least annually and when something major happens to its financial situation. To review your company’s financial plan, you will have to go through the process of creating a financial plan. These are the things you must consider:
- Goals: your company might have new goals, or it has to alter its previous goals.
- Assumptions: your company may need to set more realistic assumptions.
- Income: your company’s assets might have increased or decreased.
- Expenditure: expenditure will change as the situation surrounding your company changes.
- Assets: your company has to update its schedule of assets as values fluctuate and it needs new ones.Â
- Liabilities: your company needs to know the changes in its liabilities.
- Cashflow planning: your company needs to know how things change and its impact on the company’s ability to reach its goals.
- Emergency planning: you have to check and ensure that the emergency plan you have works on your company’s current situation.
- Financial protection: reassess employee attitude, assets, and commitment requirements.
- Paying off debt: your company should pay its debt. It would be better if more resources went to this area.
- Saving for the future: reassess your company’s plan to increase its assets and risks.
Conclusion
A financial plan is data that can help your company make the best use of its money and achieve its goals. This data doesn’t have a fixed format because every company needs a customized plan that works best for them.
Making a financial involves a lot of budgeting, such as tracking the business budget, making budget goals, and reviewing them according to the company’s current needs and plans.
This process can take a lot of work, especially for a big company. Your company can implement Accounting Software to make a good financial plan easily. Accounting Software has a lot of uses for a company’s finance.
It can automate company operations, such as its transactions which can help with financial plan-making and make the overall company operation more efficient. HashMicro’s Accounting Software provides robust features to help your company manage its finances. Start the free demo now or download HashMicro’s Accounting Software pricing scheme.
