Budgeting and forecasting

Management accounting is more than analysing production costs and profitability, it is about budgeting and forecasting too.

Budgeting removes the distraction of day-to-day operations and forces medium to long term thinking.

Budgeting can assist with the control of income and expenditure of a business. It ensures both fall in line with business objectives and the business is effectively using its resources.

Plus, it allows management to clearly see how any decision or action is going to impact the financial performance of a business.

Forecasting helps you to see what is on the horizon for your business. It will help you to plan ahead and to take more control over your business’ direction of travel.

It also enables management to accurately oversee and have more control and foresight regarding investment decisions and how making once choice vs another could impact profits or losses for a certain period or certain product or service.

In other words forecasting helps you to look ahead and make decisions now based on what the financial forecasts predict will happen in future. It will help you to ensure that every decision you make today is affordable, sustainable and is more likely to deliver the future outcome you expect.

The periodic production of management accounts allows you to understand the financial position of your business and to track your forecast against your actuals. You will build more trust in your data enabling you to accurately analyse and forecast and budget for regular supplier costs, wage costs and production costs.

With a more detailed analysis of the company’s current and forecasted incoming and outgoings, you will easily calculate optimum pricing strategies, remain competitive and achieve financial savings and efficiencies.