Budgeting is important as it provides you with an in depth of the relationship between the various financial activities that will happen in your organisation and helps you foresee and get ready for changes that will inevitably happen in the future. Budgeting directs you to focus on you must improve to increase profit and gets you prepared for the way ahead. A well thought through profit budget highlights what balances you can expect in your cash flow.

The cash flow forecast created from your budget will show you what cash you will or won’t have to invest in growing the business. If you want to track your cash flow performance accurately you need to get your hands on some good small business accounting software that will give you the reporting you need to track your actual performance against budget.

Creating more profit does not automatically create a better cashflow . Do not be deceived by this point

You should vigilantly track and immediately analyse any deviations from budget in your actual cash flow from profit. Any deviation from what you expected] you spot should be appraised to discover if you have an opportunity or a problem.

The reports in most small business accounting software allow you to drill down through the numbers and analyse the underlying details.

Expenses consume cash and it is often the case that the higher the sales the higher the cash burn as the business uses more resources to fuel the growth in sales.

You should enter all expenses and sales activity into your small business management software as soon as they occur so as you can report an accurate forecast and make corrections or adjustments in line with your budget.

I cannot stress enough the need for vigilance when it comes to cash flow forecasting and budgeting without these essential disciplines you cannot maintain and grow a healthy business.

All the best with your business and the future.