“At all times, it’s worthwhile to sit down and contemplate the future” – this is how we see it at CFO firm Finaly. Of course, meetings shouldn’t be held just for the sake of it. Company budgeting is a desired direction that is turned into actionable tasks that are managed. The company’s budget is a numerical view of the desired financial outcome, and this should be harnessed to benefit everyone in the organization. Budgeting is a crucial part of managing a company’s finances, and when done correctly, it brings many benefits to small and medium-sized enterprises (SMEs). When creating a budget, it’s also worthwhile to grasp the company’s key metrics, which you can familiarize yourself with in an earlier article we wrote.

The budget is part of the company’s financial management and planning, and it should include at least information about where the money comes from, where it goes, and how much. The budget is prepared for a desired period, usually the fiscal year or the calendar year.

We discussed budgeting for SMEs within our team and together listed the key benefits in this article:

Keep the Staff Informed About the Budget

During budgeting, continuous and open communication is key. Keep the staff informed about the various stages and decisions of the budgeting process. Participatory budgeting not only increases employee understanding and commitment but can also improve the quality of the budget by providing diverse perspectives and expertise from across the organization. If you need help with budgeting and involving the staff in the process, check out our earlier article on the benefits of CFO as a service

Company Budget Ready – What Comes Next?

Once the budget is ready, the organization should hold regular review points to assess budget performance and evaluate root causes. This gives employees the opportunity to see how their suggestions and work affect the company’s financial situation. Involving the entire staff in budgeting fosters commitment and increases trust within the company. Similarly, it enhances understanding of the company’s financial goals and strategy.

Budgeting is an Effective Tool

In summary, budgeting is an effective tool that helps SMEs see more clearly into the future, manage risks, allocate resources efficiently, and achieve their goals. When the budget year ends, ask for feedback from the staff on the budgeting process and make necessary improvements for the next time. If you need assistance with budgeting, call Finaly’s Anne at +358 (0)45 7834 1580 or book a free consultation on the topic.

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