WHY BUSINESSES SHOULD INVEST IN BUDGET MANAGEMENT SOFTWARE

 

The right budget management software can help you monitor growth, plan your assets wisely, establish your net worth, limit expenses, secure backups of accurate accounting data for future reference and run your business better. Below are some of the reasons why businesses should invest in a good budget management software.

1. Improved Transparency

Budget management software will help you deter and fight fraud involving inflated expenses. It can do this in many ways. First, the software makes it hard for employees to alter digital receipts.

Secondly, employees will be unable to claim losing digital receipts. Also, it will be easy to recognize suspicious expense entries and trends. The software has easy-to-read reports that make identification possible.

2. Better Planning for Growth

As mentioned ,a budget management software is a great way for businesses to automate their budgets and keep track of their expenses. Any capital that you save can be used in reserve for any business opportunities or new ventures that might contribute to your company’s growth.

3. Improved Management of  Cash flow

Any cash that is flowing in or out of a business within a specific period of time is called its cash flow. Businesses, especially larger ones, often use budgeting software tools to manage their cash wisely or to determine whether they have enough funds to continue operations.  For example, a real estate firm might use budgeting software to determine if it can start promoting more deals before being paid for the deals that are in progress.

4. Better Performance Evaluation

Since a budget is often used to see how a company performs every year, it can be a pretty handy tool. As a business owner, you can use it to estimate expenses and compare it total expenditures or what you have already spent on. If there are anomalies in your forecast, you can always compare these factors to review your finances for any errors.

5. Improved Financial Control

One of the best reasons why businesses need to budget is to have more control over their operations is to control where they spend their finances. Continuous budgeting and finance reviews keep a company’s funds in check and ensures that it doesn’t go over budget.

6. Improved Planning of Operations

A budget management software is like a planning tool – it helps you determine how much you can spend on different operations without draining your funds. Companies often compare current and previous budgets to see whether results are improving based on financial activities regarding liabilities, equity, costs, assets and revenue over time. A budgeting tool can make it easier for accountants or staff to categorize these factors and automate the whole budgeting process. And since the process is fully automated, it saves time in creating master budgets with planned inputs such as sales revenues and outputs or their expenses. In other words, this budget can be used to estimate what a company receives from its sales revenue and how much it will have to pay for it.

7.  Established Net Worth

A good budget management software comes with functions that can calculate a business’s net worth. A business’s net worth is the amount or value of every asset you own without the debt. In other words, it is the total assets that remain after your account for all liabilities.

8. Limited Expenditures

For businesses, budgeting is necessary to ensure that they do not spend more than they have to on resources or unessential items. But manual accounting methods are open to human error. Also, since manual budgeting reports are not always in front of you, you can end up spending more than your original cap. Budgeting software can draw up records of previous transactions with a few clicks which can help you limit your spending.

In conclusion, Robisearch Limited is one of the most comprehensive enterprise software providers, with tools for a wide-range of operations. These include budgeting, financial reporting, biometrics and so much more. For businesses  looking for a complete solution for their financial processes, Robisearch Limited is the perfect choice. Reach us on 0716413386 0r 0780655987

 

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BUDGET MANAGEMENT SYSTEM IN KENYA

 

Most individuals and businesses have funds and resources that they would like use, spend or save, for a variety of reasons. Everybody has the freedom to do so. However, most of us end up wasting funds unknowingly and later on end up with little to no money. This mostly happens because we spent more money than they could make and probably did not keep track of the spending. Therefore, some people decided to come up with a plan that would help them know how they are going to spend their money. This spending plan is what is
known as a budget.
Budgeting is the process of creating a plan to spend your money. Most people do it manually using a bit of math here and there. It works only if one did it correctly and followed strictly. However, trying to account for large sums of money needed and resources available manually became tedious and time consuming. A lot of people would encounter budgeting errors due to miscalculation. This is where a Budget Management System comes in.

money spelled out in blocks

The Budget Management system helps you to plan for your expenses, allocate funds, and budget for other expenditures, then compare them later to see which exceeded and which matched well for the planning of the next budget. This system is very common and we use in various sectors in Kenya, from SMEs, large corporations and even all the way to the National government. Budgeting involves  four major processes, as shown below.

Major Processes involved in Budgeting

  1. Budget Preparation
  2.  Budget Authorization
  3.  Budget Execution
  4.  Budget Accountability

The processes involved in budgeting tend to overlap each other during implementation process.

TYPES OF BUDGETING

Basic Budget – its main purpose is to help map out simple expenses and income. A basic budget can be created in a spreadsheet or using a template and it is great and useful for home and business planning. They are usually easy to use and flexible, as most people use it with ease. It is very useful when you need to map out simple accounting information like personal or business expenses.

Master budget – The purpose of the master budget is to include smaller operation budgets and provide a larger picture of individual income and expenses. It gives a generalized picture of expenses as a whole. A business can utilize a master budget to plan for general expenses and identify expenses at a glance.

Short-term budget – this type of a budget aids enterprises or individuals plan for short term expenses and manage funds in a shorter time span (anywhere from a week to a few months). It provides a more focused look into short-term expenses, income sources and budgeting goals. They are great for clearing short-term debt too.

Fixed Budget – This type of budget controls when income and expenses aren’t expected to change in the short-run. It is very useful in providing a simple picture of fixed income and expenses. It can be used for everyday income and expense tracking especially when you are not expecting any change in either.

Flexible Budget -for planning different levels of activity in incomes or expenses in the short-term or long-term. It offers more flexibility to the budgeting process, planning for varying activity levels in the company’s picture.

It is generally used when one is expecting different volumes for incomes and expenses.

Labour budget – tracking the cost of labour in relation to revenue. It is part of the master budget that focuses only on labour for a more specific view of an individual expense. It is therefore used to track general labour costs or plan for upcoming reductions or increases in labour needs.

Cash Budget – this type of budget is used to plan for cash flow (inflow and outflow) for a specific period of time, usually in the short term. It focuses mainly on cash inflows and outflows for a more specific financial picture. Recommended for use when you are expecting a larger volume in cash flow.

Operational Budget – also known as a functional budget. It applies to one specific operation of a business is part of the master budget. The advantage is that it only applies to a specific department, operation or function of a business, instead of the business as a whole.

It is considered only a good option for when you are overhauling a specific department or operation of a business.

Performance budget – it is designed to analyze the performance or aspect of a business and determine whether the cost is worth the output and result. It focuses on a specific aspect of a business and helps determine if the input is worth the Return of Investments (ROI).

Can be used to identify costly methods of production and determine if certain functions and operations are creating a ROI.

Static budget – Used to account for astatic expenses that won’t change. Allow for a focused look at fixed expenses that remain constant despite fluctuations in sales volume and revenue.

 

Function of a Budget Management System for Businesses.

The Budget management System helps you set up and manage budgets for your business. It becomes very easy to understand how it works once you understand the kind of budget that will help you achieve the goals that you have set.

Furthermore, it also helps you view budgets and even generate a proper budgeting report. With such reports, you can also track budget performance against your actuals using the Profit & Loss Report feature.

Finally, a proper budgeting and accounting system can help you control and reconcile money between your business bank accounts.

At Robisearch Ltd, this feature is integrated in most of our systems as a module. It generally even makes work easier for those in charge of accounting and finance.

Robisearch Ltd offers the best digital solutions for businesses; SMEs to large corporate businesses.

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