Every business needs to be able to plan for the future. It’s impossible to know what the next year will bring, but it is possible to gain some understanding based on past trends. If you have an accurate record of how the last financial year has been for you, you can begin to forecast what the future might look like.
There are multiple ways that you can do this. The best method is probably using bookkeeping as not only a way of keeping accurate records for tax purposes, but also to forecast and budget for the road ahead. Let’s talk about what we mean.
The Power of Bookkeeping
Bookkeeping is one of the most powerful assets that the business can have if used correctly. Imagine you had a complete comprehensive record of all the financial information your business generated. You had access to profits, losses, how much money was brought in each day, each month, how the business performed during certain seasons, during public holidays - it’s a lot of information to be able to look at.
The great thing about bookkeeping is that you have all of this information contained within your books. If you keep precise, comprehensive books with plenty of detail, then all of this knowledge is freely available to you at any given time. Now, you could simply keep it and have it as a record, or you could put it to work for you, using it to make life a little bit more focused.
Using Bookkeeping To Forecast and Budget
So, you have access to all of these analytics through bookkeeping. How do you use them effectively? Well, if you have a good eye for detail, and you can spot patterns, you can start to draw conclusions about your business that you may not notice otherwise.
Let’s say for a moment that your business performance particularly well during the Christmas period. Sales up, profits are high, and Christmas is usually a strong time for you. With this knowledge, a smart business might start to prepare for the Christmas period ahead of time. They may choose to give a lot more of their marketing budget to push products and services, based on the projection that they will have another strong Christmas.
Contrastingly, the inverse is also true. If your books continuously show that you have a weak month, and you don’t make a lot of money during this month, then budgeting for it becomes a lot easier. There’s almost no point in putting lots of resources into marketing or sales that month if you know that the net result isn’t profitable for your company.
Bookkeeping Helps Businesses
We can clearly see that bookkeeping can help businesses with both forecasting and budgeting. Getting access to personalised analytics without having to comb through endless amounts of data is very useful. If you are searching for these kinds of analytics to help with budgeting and forecasting, then Probookkeeper is a good tool to use.