Surviving a recession: How budgeting software can keep your business afloat
27 March 2023
Decreased sales, increased competition, cash flow problems and job losses are all significant impacts this uncertain economy can and is having on businesses. By the quarter of 2023, some big companies are cutting back, restructuring or right-sizing. Amazon is set to make 18,000 people redundant, Microsoft is laying off 10,000 employees and Xero is planning to cut up to 800 jobs. Infometrics chief forecaster Gareth Kiernan says, “We think the economy is already in recession at the moment. We suspect that the final quarter of 2022 will have shown negative growth, and we're expecting negative growth to pretty much continue throughout 2023 and early next year as well."
Businesses should closely monitor their cash flow and be prepared for a potential downturn. Budgeting is an essential aspect of cashflow management. It helps you plan your finances and prioritise your spending, ensuing that you allocate funds to the areas that matter most.
With the right software, Businesses can use technology to set budgets, streamline the process, and achieve various benefits that are not possible with traditional budget-setting methods.
Here are some benefits of using software to set and track budgets:
Accuracy: One of the primary benefits of using budgeting software is accuracy. It eliminates the possibility of human error that can occur when manually tracking expenses or using spreadsheets. Software allows you to input your financial data, and it automatically calculates your income, expenses, and savings. This ensures that your budget is accurate, which is essential for making informed financial decisions.
Efficiency: Using software to set and track budgets saves time and effort. It automates the process of organizing and categorizing expenses, making it easier to analyse spending patterns and identify areas where you can cut costs. It eliminates the need for manual data entry, which can be time-consuming and prone to errors. It also allows business to integrate accounting data directly into the budgeting software which streamlines the process.
Visualisation: Budgeting software provides visual representations of your finances, such as graphs and charts, making it easier to understand your financial situation at a glance. You can quickly identify where you are overspending and adjust your budget accordingly. Visualisations also help motivate you to stay on track towards your financial goals.
Flexibility: Using technology for budgeting allows for greater flexibility in the budgeting process. Businesses can make adjustments to the budget as needed, and managers can access the data from anywhere, at any time. With traditional budgeting methods, making changes to the budget can be a tedious process, requiring significant time and effort.
Reporting: Budgeting software can generate detailed and customised financial reports to meet your needs. By comparing budget to actuals this can help businesses gain a better understanding of their financial performance and identify areas where they can improve.
Forecasting Scenarios: Budgeting software can help businesses forecast their financial performance based on historical data, industry trends, and other external factors. By setting up key drivers and adjusting them to plan for different scenarios businesses can make informed decisions about their financial future. Forecasting can also help businesses identify potential risks and take proactive measures to mitigate them.
Using budgeting software can provide businesses with numerous benefits and increase the chances of weathering economic uncertainty and remaining financially stable, which seems as important as ever.
Knowing how to set an appropriate budget and manage your cashflow can feel overwhelming, especially in uncertainty. Speaking with a Findex Business Advisor, with access to accounting, financial planning, and digital expertise means streamlining the budget setting process. Considering not just where your business is now, but how to get and keep your business on the right track for your goals. Contact us via our website today.