To use your budgets effectively, you will need to review and revise them frequently. This is particularly true if your business is growing and you are planning to move into new areas.
Using up-to-date budgets will help you manage your cashflow effectively and identify what needs to be achieved in the next budgeting period.
There are two main areas to consider when reviewing your budget - income and expenditure.
Your actual income - each month, you should compare your actual income with your sales budget. To do this, you should:
Analysing these variations will help you to set future budgets more accurately and also allow you to take action where needed.
Your actual expenditure - regularly review your actual expenditure against your budget. This will help you to predict future costs with greater reliability. You should:
Institute of Chartered Accountants in England and Wales