The difference between budgeting and projections:
Budgeting and forecasting are two extremely important functions for your business, regardless of size. Although linked, the two are not the same.
Budgeting can be seen as your company’s blueprint for the year. It is a detailed outline of goals and what the business thinks will happen over the course of the year. Most companies go through a budgeting process and look at the year prior as a guide. You budget helps you to run your business and should be used as a financial tool.
Projections are a way to forecast, at a higher level, what you think will happen. They can be done over long and short term and as conservative and aggressive forecasts. Forecasting helps a company make adjustments in spending as the business changes. For example, if it was not in the budget that a costumer would reduce or increase their business with you, a forecast is a great tool to help adjust to those changes without changing the budget.
Why do I need a CFO?
You didn’t start your business or become the head of an organization because you are a financial expert. You are there to grow and succeed. The accounting, bookkeeping and financial aspects of your business are important to how you run your company, but it is time consuming and if not done properly, can lead to more headaches down the road.
Keeping track of your bookkeeping and your financial statements is time consuming and difficult to manage. But most frustrating is understanding and interpreting your financial picture from reports. CFOs are responsible for timely and accurate presentations and financial reports in order to capitalize on your growth.
