Controlling a budget - checklist

A female business owner sits at her desk and carefully checks her budget

Staying on top of your finances is vital if you want your business to succeed. Read our handy hints on controlling your budget.

  • Make sure the budget you have prepared includes all the key indicators you wish to control.
  • Use budgeting software to set realistic budgets based on historical data.
  • Give responsibility for budget items only to individuals with the authority to control the outcome.
  • Schedule regular reviews of budget performance.
  • Review budgeted figures to identify cash flow or other problems which can be anticipated and tackled in advance.
  • Use your software's exception reporting and alerts to flag potential issues.
  • Compare margins, working capital and other key ratios with historical figures to identify how performance is expected to improve or deteriorate.
  • Carry out a sensitivity analysis to see what effect different outcomes could have on performance.
  • Focus on controlling items which could have a significant effect on overall business performance. For example, reducing waste, eliminating unnecessary spending, monitoring overtime or focussing sales efforts on the targets most likely to convert to profitable business. 
  • As figures become available, compare actual sales to budget and identify reasons for this sales variance.
  • Determine how fixed costs differed from budget and whether any changes are likely to be permanent such as increases to the minimum wage.
  • Analyse the extent to which variances in variable costs reflect sales variances, or whether prices or efficiency have changed.
  • Identify to what extent variances in income or expenditure reflect differences in timing rather than performance.
  • Take action to sort out underperformance or excessive expenditure which can be controlled.
  • Capitalise on unexpected favourable changes.
  • Revise future budgets in the light of the most up-to-date information.

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