An annual budget is the crucial factor of a company that assists not only in applying information about frequent functions of a business but also pointing out problems before they ruin your business plan. You will find important guidelines to pursue in developing the budget for your company.
You should take budgeting as an essential managing tool while it carries three basic parts covering all scenarios of your company. It creates visionary income and expenditure, records actual income and expenditure and finally prepares a report in this regard and acts on the variation between the two i.e. speculative and actual. As budgets grow from business arrangements, therefore come across changes according to the state of affairs. The ultimate goal of your budget is providing a detailed and accurate comparison of actual and desired performance.
You should initiate your first step in estimating your resources; you have to identify the related line items i.e. the things those have been assigned monthly cash value including office charges and tax, employment salary and profits, publicity, utilities such as telephone and electricity, vehicles, travel, legal costs. As you are well aware that many of these items are fixed operating cost which makes the task reasonably easy.
Here is preview of this Annual Budget Template created using Microsoft Excel,
In order to generate revenue for your company, you should utilize a well worked out business plan as a guide and make projections regarding the sales as you know that revenue is sales and nothing else. You should manage projection properly by assigning a target that may be divided into monthly and weekly modules to find better results. While setting those targets, you should consider historical data as well.
You should consider working papers valuable as these are detailed calculations that give monthly financial statements regarding each line item of revenue and expenditure. You should manage separate working papers for each line item in the annual budget of your company. It will go a long way in providing you accurate and quick information of revenue generated from one aspect of your business. When you require a review of your company’s budget, your working papers will be the best source of information.
It is very important to identify discrepancy between your budget and factual. You should make sure that a clearly recognized list of individual components of line items is handed over to the concerned person who has been deputed for maintaining the financial record. This person could record the real transaction logically that can then be evaluated with the budget properly.
You should not ignore ensuring the preparation of a budget action list that is the outcome of the comparison of the actual against the budget. The budget action list goes a long way to guide for re-evaluation of budget workings to a large extent.
You should see that a written budget report of your company is arranged monthly, defining major discrepancy between actual and budget items. The report should give an explanation for any discrepancy and propose appropriate actions as well.
You should use the annual budget of your company to measure performance. If you succeed it, you are going to create a financial action plan that can serve many beneficial functions. If you review your budgets on regular basis taking it as a part of your annual planning cycle, it will prove an indicator of costs and revenues, a tool of providing information and maintaining management decisions throughout the year as well as a way of watching and organizing your business.
Here is download link for this Annual Budget Template,