There is no point to making a budget if you don’t follow through. That’s one of the reasons why it is important to check your actual vs budget projections. What does this mean? Well, essentially you compare your predicted budget projections to what the real-world numbers are showing. You find a difference between what was expected and what is happening, that’s considered a variance. The goal, obviously, is to have as few or as small a variance as possible. Even when you have a large difference, however, comparing your actual vs. budget has a lot of benefits.
Questica wants to offer you great financial tips like these. We also want to help you with your budgeting and forecasting needs.
Alter future financial forecasts
One of the first important things about looking at your actual vs budget is that you are able to alter your plans for the future. It is important to remember that budgets, once made, are never immutable. Your budget is a guideline, not something that is set in stone. When you catch a large variance early, you give yourself time to adjust your future forecasts. When you know more about what to expect, then creating future budgets and forecasts should be easier and take less time overall.
Of course, another great benefit is that you learn information that allows you to modify your expenditures. Think of monitoring your budget vs actual results to something like your college midterm report. You examine it to learn what areas you’re doing well in and where you need to improve. If you’re spending so much on marketing that you’re cutting into your profits or your donations, then it’s time to make a change.
Locate hidden perils . . . and benefits
Once you’ve discovered your variances, then the most important question to ask is: “Why?” As in, why does this variance exist in the first place? It could be for a bad reason, like perhaps your product isn’t selling well. Maybe a shift in the market has turned public interest away from what you’re trying to sell. On the other hand, the reason for the variance could be an unexpected benefit. For small businesses, perhaps you could negotiate a deal with a vendor for far cheaper than expected. Or maybe your fundraising event was more popular than expected.
There are lots of great benefits to comparing your actual vs budget. One way to get things started on the right foot is to have a strong budget at the beginning of the year. A strong budgeting software can help you do that! Questica’s budgeting and forecasting software is easy to learn, use, and manage. You’ll forget your budgeting frustrations as you take advantage of our cloud-based program, and you’ll marvel at how quickly you’ll finish your tasks! If you are interested in trying Questica software for yourself you can request a free demo, or sign up for one of our free monthly informational webinars. At every stage of the budgeting process, trust in Questica to keep you on track.