The expertise of a Certified Public Accountant does not confine to a company ledger or financial statements. He can also map the business plan and goals and take you on the right path toward success. Your CPA also makes a budget for your business that informs you whether the estimated revenue you want to achieve is enough to meet your business’s next month’s expenses. He will also consult you regarding your big business decisions and help forecast the financials based on your previous earnings and spending for you and acknowledge the pros and cons of the decision. Business forecasts are strategic documents that define the big picture of the business’s long-term goals. An adequate and accurate business budget and forecasts can help to know:
- What number of sales does the business have the capacity to produce in the next year?
- What will be the business’s projected sales and revenues?
- What market forces will impact the business cycle?
- What will be the effect of the sale on economic activity?
- Do the projected sales match the business budget?
A good CPA gives a clear and accurate picture of the business in both optimistic and pessimistic situations and acknowledges how much your business will be affected by external factors. A good budgeting and forecasting system in your business allows you to:
- Strengthen the link between day-to-day operations and financial decisions like the impact on business revenue due to an increase in administrative expense by hiring a new employee.
- Speed up the business decision process through forecasting sales trends and prioritizing business expenses.
- Take prompt action in response to new business opportunities and threats through a forecasting contingency planning.
- Identifying your company’s weaknesses allows you to address them before they become serious problems.
- Continuous budgeting and forecasting will help you prepare for possible business events that may occur.
- Improve the communication and collaboration with the business partners as the business financials will not be based on guesses.
- Boost the confidence of the business owner because he will know how much he can invest and grasp the business opportunities.
- Make business decisions more accurately based on hard data instead of shooting arrows in the dark.
- Set an achievable sales target by tracking the projected business performance through forecasting.
- Persuade investors and financial institutions with logical figures and professional analysis.
- Get a clear picture of where and when the financial resources will be allocated shortly or next two years to keep the business’s financial position on track.
- Predict accurate business cash flows as detailed documentation regarding the sources of cash and its needs is analyzed.
- Compare the business performance with budget or forecasted sales to allow you to identify whether the business performance is aligned with set goals.
Today, the budgeting and forecasting process has become an integral part of small and large businesses. As the benefits of budgeting and forecasting do not confine to the above-given list, there are lot more. Business does not operate on guesses. A CPA is a licensed person that can provide you with an accurate business idea through budgeting and forecasting techniques. According to John Boykas, a well-known CPA, CPAs have to talk about numbers. Sometimes it is like holding their feet to the fire. Sometimes a gentle reminder. For a better understanding of the business and the budgeting and forecasting process of the business, the owner must communicate with its CPA frequently. So consult your CPA now for your business budgeting and forecasting because earlier is better.