Making Easy Comparisons
When you have a monthly budget report in place, you can compare the month for previous years with the current month. Looking at previous years’ numbers is also how you get the projected numbers for the current year and identify trends. One of the best ways to easily interpret the budget is to put all the data into a single template. A monthly budget doesn’t have to be incredibly complicated. When running a business, you need something that is fast and simple so you don’t spend more time on the numbers than necessary.
When using a template, you can look at the projected revenue and expenses and create financial forecasts so you know what to expect. The numbers for the current year will be used to set your budget and financial forecasts for next year.
Budget vs. Actual
Once you have your budget in place, you can then enter the budget numbers into a budget vs. actual template. This is where you will compare what you have budgeted against what you are really spending. If you are spending more than your budget, you can identify areas where you can reduce costs.
It’s important to keep track of all numbers, and the monthly budget is where it begins. It’s a critical process that must be visited every month and compared to previous years so you have an idea of which direction the business is moving. You can also make sure your budget numbers remain consistent with your business plan.