Key Accounting Strategies to Consider While Creating Budget for 2021
An eventful year is coming to an end, and the corporate sector is planning its spending for the year ahead. Preparing the corporate budget at the end of the year provides the companies with a plan for spending in the next year. The process of making the corporate budget at the end of the year will lead your company to enter the New Year on the right foot. The best accounting firms in Dubai can help your company by making the budgeting process smooth as they keep your cash flow in order. Here is a list of key strategies that you must adopt for creating a budget for 2021:
Create a Solid Financial Model
Budgets are influenced by a variety of factors including government decisions, market events, supply & demand and investments. You should also take into account the pandemic-related market fluctuations, considering the circumstances in 2020. These factors should reflect on the predictions and analyses that will determine the impact of those events on your company’s core functions.
This involves the pre-budgeting phase, where you need to create a proper financial model. The budget should cover the output of your budget forecast financial model and must represent the target expenses and revenues in the coming months. In short, a solid financial model acts as the foundation for a robust corporate budget. Get the help of accounting firms in Dubai to ensure you are heading in the proper direction.
Create Intervals for Updating Budget
You should ensure that the accountants are creating a timeline for updating the budget every year so that your efforts won’t go wasted. Decide whether you want to update the budget on a monthly, quarterly or bi-annual basis. Regularly updating the budget allows you to know that you will enter the next quarter with the right strategies.
You should also take into account the changes in the laws, political events and social climate while updating the budget. If any event is likely to influence your business you should plan for the best- and worst-case scenarios, or evaluate after the fact, will help your company measure its budget variance at that point in time.
Set a Time Frame for Budget Planning
The creation of a financial model and budget allocations for the new budget takes time. Also, the end-of-the-year holiday season may be hectic for many businesses. Such businesses won’t have much time at their disposal during the holiday season. Entrusting the budgeting responsibilities to the best accounting firms in Dubai will ensure that you are not lagging behind when the New Year starts.
Make the Budgeting Process Transparent
Most companies will be using the latest accounting software to plan their budget. In that case, you should ensure that the point from which information can be gathered is easily accessible to the responsible personnel. It should be clearly labelled to ensure transparency and accuracy.
The department managers should be entrusted with permissions to ensure that the changes to the budget can be tracked without hassle. Make a checklist of hard-copy documents and create a permission hierarchy on the software (if it’s cloud-based) the budgeting team would find the process easy.
Methods to Determine Budget Allocations
There are methods for making the company’s budgeting allocations. One method is the traditional method where you can build on the company’s previous-year budget and determine allocations based on the spending patterns of each department. Another method is zero-based budgeting, which is useful if you need to have a specific focus on allocations. Here the baseline is considered as zero instead of the previous year’s budget.
Tops Factors to Consider for Planning Budget
You should create a proper framework for planning a corporate budget for 2021. The budget is mainly based on factors such as
- Cash Flow Management
- Investment Management
- Insurance Planning
- Tax / VAT Planning
- Real Estate Planning
Plan the Budget with the Best Accounting Firms in Dubai
Apart from maintaining the books of accounts, accountants play a key role in the financial planning of companies, especially in preparing the corporate budget. Having a sound year-end budget helps the companies to have a clear direction in terms of financial planning in the next year. The process of making the corporate budget at the end of the year will lead your company to enter the New Year on the right foot. The best accounting firms in Dubai such as Jitendra Chartered Accountants (JCA) can help your company by making the budgeting process smooth as they keep your cash flow in order. JCA’s highly qualified Chartered Accountants assist the businesses by delivering reliable budgeting, accounting & bookkeeping services in Dubai. JCA is a one-stop solution for accounting & bookkeeping, auditing, VAT filing, etc. By availing of JCA’s accounting & bookkeeping services in Dubai, entrepreneurs can ensure business growth.