End of Year Budgeting: Helpful Tips to Get You Started
It’s hard to believe 2024 is just around the corner! How’s your end-of-year budgeting coming along? At Flex-Able Solutions, we like to think of budgeting as setting the stage for all the amazing things your company can achieve in the following year. By getting a handle on your finances early, you’re giving your business a head start on those 2024 goals.
7 Tips for End-of-Year Budgeting
We get it, end-of-year reporting and budgeting can feel (and be) daunting. But don’t worry, we’re here to help. Start by following these budgeting tips from our Flexers:
1. Start Preparing Your Budget in the Fall
It’s ideal to start preparing your budget a few months before the year ends. This will give you ample time to gather all necessary data, analyze it, and make well-informed decisions. Plus, starting early ensures that you’ll be buttoned up for tax season. For most businesses, we recommend starting in the early fall.
2. Create a Model From Your Current Financials
Your budget should be an extension of your current financial situation. Use your existing financial statements as a template. This ensures consistency and makes it easier to see year-over-year comparisons. Visit our accounting and finance page to get more insights on financial modeling.
3. Don’t Overcomplicate It
Simplicity is key. While it’s essential to be thorough, you don’t want to get lost in the weeds. Ensure that your budget is comprehensive yet straightforward. Rule of thumb: if a team member can’t understand or navigate the budget easily, it might need to be simplified.
4. Use Your Budget as a (Loose) Guide
Remember, your budget for the calendar year is not set in stone; it’s a guide to help you navigate financial decisions throughout the year. Think of it as your financial GPS, guiding you toward your goals and alerting you if you veer off course.
5. Update Your Budget Regularly
While the budget is prepared at the end of the year, it’s crucial to review and adjust it periodically. Depending on the volatility of your industry and business dynamics, consider monthly, quarterly, or semi-annual reviews. This type of strategic budgeting will help ensure you’re on track and allow you to make necessary changes if unforeseen events occur.
6. Use Historical Trends
Past performance can often hint at future trends. By analyzing historical data, you can spot patterns that will help in forecasting. It will also enable you to set realistic and achievable goals.
7. Budget VS Forecast: What’s the Difference?
While both budget and forecast are finance related, they serve different purposes:
- Budget – An annual budget is a detailed plan of what you expect to happen based on your set strategies and decisions. It’s a target you aim for. A budget remains relatively fixed.
- Forecast – On the other hand, a forecast is an updated version of the budget based on actual performance and current conditions. A forecast can change depending on your current situation and provides a more realistic expectation of the financial outcome.
Navigate End-of-Year Budgeting With Flex
End-of-year budgeting is about setting a clear direction for the future. With these tips, you can set your financial plans in motion for 2024! Remember, a budget offers a roadmap, but flexibility and regular updates will ensure you stay on the right path. If you’d like help with budgeting, you’re looking for budget plan ideas, or you have questions about any of our tips above, reach out. We’re here to help!