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Benefits of Budgeting

Posted on: April 19th, 2023

Riding interest rates are putting a squeeze on many businesses.  Watching your cash flow has never been more important.  The benefits of budgeting can pay big dividends.

MLA provides finance, strategy, and solutions to small and mid-sized businesses.  We can help you create a budget that fits your needs and prepares you for leaner times ahead.  A good CFO can help you predict the financial future, and a budget is a key tool for doing that.

Budgeting for Operations and Finance Defined

A master budget is comprised of two components, the planned operating budget, and the financial budget.  The planned operating budget summarizes a subset of other budgets, including revenue, cost of goods sold, and other miscellaneous expenses, resulting in a projected income statement.

The financial budget helps management plan the financing of assets, estimates both long-term and short-term cash inflows and outflows, and reports the expected value of assets, liabilities, and owner’s equity at a future time, resulting in a projected balance sheet.  See Balance Sheet Optimization.

Benefits of Budgeting

One of the main benefits of budgeting is that it forces management to think long-term and take action to achieve desired results.  When actual results are compared to the budget, areas that did not meet their goals can receive additional attention.

This long-term thinking forces you to anticipate what might go well and what might not.  It’s then a simple step to start preparing contingency plans for both scenarios.

In addition to finance, MLA provides strategy and solutions. That means we can help you think through these scenarios and have the resources in place to act when the time comes.

Are you ready to take control of your financial future?  A good budget and a clear strategy can help you do that.  And MLA can help.  Contact us to learn more.