Budgeting is the process of creating a spending plan for your money. Creating a plan of how are you going to spend your money allows you to determine in advance whether you will have enough money to buy the things you want to or just to save up for something in the future. This spending plan would basically help you evaluate and understand your spending allocation and allows you to focus your money for more important things.
What is Budget Forecasting?
Then what is Budget Forecasting? This is used to determine how companies should allocate their budgets for a future period – both short-term and long-term, and/or allowing a business to plan its budget accurately for its fiscal year. It is much important in helping the management team make adjustments to their spending plans for a longer period.
Below are some of the reasons why a business owner should do Budget Forecasting:
1. Becoming clearer on your financial future. This is especially important where you need to plan the roll out of more stores, expansion steps which will severely impact your finances and might require additional funding.
2. Be able to implement rolling forecasts that allow you to constantly stay on top of your updated forecast.
3. Undertaking actual to budget comparisons which allows obtaining a better understanding of your budgeting accuracy by analyzing the reasons for any eventual deviation.
4. Budget Forecasting allows you to plan various scenarios or different financial potentials based on a set of varying assumptions. This way, you can better understand the effects of certain scenarios and adjust your spending allocations accordingly. As you anticipate problems, your financial decision-making becomes more solid and create better financial decisions.
The results of a Budget Forecasting may not always be up to date because of the changing market conditions. In order to solve this, the financial data used in the forecasting should be continuously updated so that your basis for effective financial decision-making stays accurate. Being able to plan the budget allocation against projected income and expense will put the company in good financial position towards attaining company goals.
Where to get Budget Forecasting Templates?
Basically, Budget Forecasting helps you deal with the potential impact of expected revenues and expenditures will have on your business. Developing a budget forecasting tool is an ongoing tasks and subject to continuous improvement. To get started, it might be a good idea to consult and use one of the budget forecasting templates.
Using a spreadsheet budget template for forecasting purposes will give you a framework how to plan-out your budget and how to run actual to budget comparisons.
eFinancialModels offers a vast selection of Budget Forecasting Templates for different types of niches or industry. Be sure to check out their website and look for the Budget Forecasting Templates or financial plan template that suits best your needs.