Carefully and critically examine any changes, whether positive or negative, and the
reasons for it determined.
If the change is negative, then implement a corrective plan of action. If the change
is positive, then you should ask yourself:
With a little digging, you may discover something that, if controlled and directed,
could have a major impact on the future profitability of the company.
Suggestions and tips
While doing your Pro-Forma Cash Flow Statement for the month, it is important to
cast your eye back upon previous months to identify any trends or offsets. A review
and analysis of any monthly fluctuations will often reveal:
- The negative deviation in one month is offset by a positive deviation in the
following month - Seasonal fluctuations or business cycle factors that are, perhaps, because of
the variable timing of projects
With experience, budgeting and analysis will become more exact and you will have
greater control over the profitability of your business. All financial control
documents should be adapted to the needs of your business in terms of the items
included and the degree of detail, but the format should adhere to generally
accepted accounting principles. Your accountant will help you in this area but, you
must be the one to decide what information is most useful to you in running the
business, and what information reflected by the Budget Deviation Analysis is most
significant.
Below are samples of:
- Projected Cash Sales and Accounts Receivable
- Projected Accounts Payable
- Pro-Forma Cash Flow Statement (Worksheet)
.