Budgeting is one of the most important processes you shouldn’t miss when reopening your business after the circuit breaker. If your company is experiencing a significant decline in sales as a result of COVID-19, then you need to effectively manage your budget to restore your company’s financial health. Here are five simple budgeting tips that can help your business get ready for the new normal.
1. Understand the impact of COVID-19
Before budgeting, you must first know how severe the COVID-19 outbreak has affected your company. By assessing the severity of the impact, you will be able to make a more solid financial plan.
Companies experiencing a slight decrease in sales may only need to make small changes to their financial planning. Meanwhile, companies that are badly affected may need to plan for a revamp of their entire cost structure.
2. Create a solid financial plan with your team
Create a COVID-19 financial-planning team involving a range of cross-functional teams from different departments such as sales and supply chain departments. They might be able to help provide a comprehensive explanation about changing consumer behavior, current market and financial trends, and potential future indicators.
You can count on your company’s financial statements in January 2020 to compare your company’s financial performance before and after COVID-19. Your financial forecasts and budgeting techniques will most likely change since you have to adjust to the current economic situation. Use a web-based financial app to help you generate real-time accurate financial reports.
3. Evaluate your cash flow statements
Now, it’s time to analyze your cash flow statements. Check your accounts payable and accounts receivable to ensure that they’re paid on time. From here, you will find out your company’s expenses during the pandemic. Then you can record any costs that you can reduce.
In addition to controlling the budget, evaluating cash flow statements can also help you find an effort to boost the company’s revenue. Use HashMicro’s Accounting Software to make it easier for you to keep track of the company’s cash flow wherever you are.
4. Prioritize your budget allocations
By this time, you should have prepared an emergency fund. It’s important to regulate how you’re going to use the emergency fund. Before the pandemic, you might have planned to spend the company’s money on various things like seminars, new marketing tools, and etc. But, those plans have to be rearranged as your priorities have changed.
Prioritize your budget allocations for essential things that provide high value to your business. Postpone investments and expansion plans until your company regains its financial health. Review all purchase requests from each department or business unit. To control the company’s procurement costs, opt for HashMicro’s easy-to-use Procurement Software.
5. Improve budgeting process with automation
The use of accounting software can greatly help improve your budgeting process while reducing operating costs. This tool helps automate your accounting processes so you don’t need to hire additional accountants and save money instead.
HashMicro’s Accounting System provides a budget management feature that is connected to the Purchasing System. The feature allows you to set an approval matrix for every purchase request from different departments or locations.