Budgeting time

Planning ahead for next year, December is usually the month most businesses finalise the next economic period’s budget. 

Budgets are technical documents based on facts and accurate estimates. The elements classified as available funds are approved loans, money we actually have on hand and account receivables, contract agreements, agreed sales or standing orders. Predicted sales can also be counted in but only based on reasonable arguments and facts. Once realising how much money are available for spending, every business function or department will get its share according to what matters most for each business and what are the corporate visions and the objectives that set the priorities. Managers need to secure the operating capital of the business, the daily cashflow including wages, production, sales, marketing cost and all individual expenses are fully covered on time.  

Every business makes its own rules so what might be a good budget for one might not work for an other. The basic condition every budget should cover is to make sure the business spends less than it earns keeping everything on track to reveal any hidden income or expenditure that might disturb the flow. The budget should not be made to restrict expenses but to rationalise money exchange to the benefit of the business. Since every business aims in profit this should be one of the main aims of the budget too. 

For example if a company realises that to make the next big step and boost its sales it needs to get into public procurement, this as a strategic decision should also be supported in the budget. A set of new expenses for that cause - like new employees with relevant experience should be hired, insurance contracts should be revised, disabled accesses should be installed - will need to be planned. 

An other example could be the yearly updates made on existing budget accounts like in marketing were in the last 4 years there is a gradual global budget switch from offline to online activities. If your industry standard is to increase digital spend by 10% per year you should consider doing at least the same or explore if you have, or can acquire the know-how to create an opportunity by spending a little more than that. No corporate entity should be afraid to invest on actions that can guarantee viability and increase profits. 

The point is to understand when you have it and how much money you have available, what you need to spend it on and when always making sure that you do not spend more than you have.