Business
Budgeting: Common
Budgeting Mistakes and How to Avoid Them
Here are
some common mistakes businesses make when budgeting.
Do not
count taxable amounts as company holdings
It is
easy to forget that the balance in the company’s bank account does not
represent the true holding value of the company. Remember that if you
exceed the VAT threshold, a certain amount will be owed as VAT each
quarter and that you will have to pay corporation tax at the end of the
company’s financial year. By counting the entire amount of what is in the
bank account as holdings, you risk making purchases that the business
cannot afford.
Do not
ignore your cash flow situation
Cash
flow problems are caused by a time lag between when you pay your suppliers
and when you receive money from your customers, and they are at the root
of many companies’ failures. Try and manage your cash flow by chasing up
late payments and not spending money that you have not yet received.
Do not
over promise and under deliver
It is
often the case that you can generate repeat business from existing
customers and that it is easier to do this than to hunt for completely new
business. By over promising and under delivering you risk disappointing
your customers and losing any future business that they may have put your
way. It is far better to under promise and over deliver so that you exceed
their expectations.
Do not
mismanage your advertising finances
When
building the cost of advertising into your business accounts be careful
not to show these costs as a percentage of sales in the same period. Bear
in mind that advertising normally takes a certain amount of time before it
yields sales. Make sure that you have accumulated an advertising budget
before you commit any money and that you have built projected returns
properly into your accounts.
Victoria
Selman
http://www.onstop.co.uk/improving-manging-cashflow.htm
