THE BUDGET & BUDGETING
HOLD EVERYTHING!!!
Hold everything, there’s a budget coming! Don’t buy property, don’t build a house, don’t restructure your business, don’t breath! Sadly that’s the way people seem to be reacting to the upcoming 20 May budget. What a waste of an opportunity to keep the economic recovery going after a promising start in late in 2009?
It’s not as though Bill and John have been keeping secrets; GST up to 15%, cancel depreciation on buildings, drop the top tax rate to 33% - would be a pretty good bet? Tinkering at best. Yet we seem to be afraid that it’s going to be some colossal life changing event so in the meantime….do nothing.
The base economic indicators are now looking good; commodity prices right up again, export returns up, the $NZ going down (esp. vs. $AUS), Aussie is on a roll, world economic demand rising, food supply short, China is on a roll, interest rates still “low”, job vacancies up, farm sales happening again at good values, property values didn’t tank, India is on a roll, we have two bridges and the credit crisis is healing. Yes, credit is tight for those who can’t afford it, the UK, USA and the poorer parts of Europe still have fundamental economic imbalances to correct and some of our businesses are running very low on equity. But compared to two years ago we are in clover!
So those who are smart might just do something and take the last opportunity there will be for a while and buy up while everyone else sits back, waiting…for what?
YOUR FINANCIAL FORECAST
While government prepares its budget, smart businesses will be thinking about their 2010/11 financial year. They know that in a fast changing and competitive world historical financial data is of limited use. Often by the time you realize it an opportunity has passed you by, or it is too late to avoid a serious financial problem. Astute business people are always thinking forward.
Financial forecasting provides a powerful forward thinking business decision making tool. You can focus on where you want to go and deal with important financial questions. If you want to be progressive in business you must plan ahead. Those who have already built financial forecasting into their business management process are convinced of the benefits:
- Sets financial targets for the year - provides something to aim for
- Determine funding needs - forecast can be given to lenders
- Enables you to calculate break-even and “what if” analysis0
- Sets targets for Gross and Net profit %’s
- Identifies overheads and improves control of spending
- Identifies capital expenditure needs and affordability
- Assists with tax payment planning – reduces risk of tax penalties, helps avoid paying too much tax
- Determines the level of drawings you can take without stifling cash flow
- Provides peace of mind – we know what we can achieve
- Enables comparison with actual results during the year
Fraser Accounting has a unique forecasting model that provides:
- An easy to read summary schedule showing key financial results and statistics
- A month by month projection of profit
- A month by month projection of cash flow
- A month by month projection of balance sheet
- Detailed schedules of movements in debtors, creditors, and stock, borrowings, and fixed assets
The model is very flexible and can be easily tailored to your particular circumstances. Additional schedules, statistics, and reports can be added according to your requirements.
We prepare the forecasting model on an agreed upfront price basis. Please call your Fraser Accounting advisor to discuss further.
Business Tip
No matter how far you have gone on the wrong road, turn back.
Important: This is not advice. Readers should not act solely on the basis of the material contained in this report. Items herein are general comments only and do not constitute or convey advice perse. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas.
