The ultimate guide to budgeting for businesses in the new financial year
With tighter budgets and more competitive markets, financial management for businesses is of critical importance in the 2023-24 financial year. Identifying where your expenses lie can help you to understand how to better invest your budget over the new tax year. This clarity over expected expenditure and annual turnover can enlighten you on upcoming expenses and review how you’re progressing towards your financial targets each month.
Key considerations for your business budget
Sales and revenue projections
Using the sales data from previous years, you can create realistic revenue projections and targets for your team to work towards.
Depending on the industry you operate in, your business may be subject to fluctuations in sales as a result of seasonal trading. Your revenue projections for the year should identify this predicted variation in demand for your products and services to pinpoint what your position may be. It can also help to forecast when more or less resource may be required at various points throughout the year, including money exchanges in foreign currencies.
Fixed and variable costs
It’s important to understand the different expenses your business incurs. Fixed costs occur on a regular basis at a constant amount, such as rent on business premises and business insurance. Variable costs tend to vary depending on the levels of business activity, such as purchases of raw materials.
Assessing how much profit your business generates from its revenue is important for budgeting for the financial year ahead. Calculating your gross profit margin helps you to understand how much profit is being generated after direct expenses. Calculating your net profit margin gives an oversight of the percentage of profit your business produces from total revenue after the total business costs.
Perhaps the most important consideration for effective budgeting is to regularly revisit and adjust your budget as needed based on any unpredicted under or overspending. This provides a more detailed
understanding of the financial health of your business and allows you to tailor your budget accordingly for the following months.
Budgeting for foreign exchange
Businesses that trade and operate internationally must factor their foreign exchange requirements into their budget. To do so effectively, this requires an understanding of how any exchange rates might fluctuate across the financial year and impact your currency requirements. Otherwise, this unpredictability may make it difficult to select an appropriate exchange rate. Setting budget rates for your functional currency and each currency you trade with allows you to protect your gross margins and provides reassurance for the months ahead.
Setting a foreign exchange budget
To effectively set a foreign exchange budget, you first need to select a foreign exchange rate that accounts for how much of your yearly costs have foreign exchange exposure. This will aid estimation of your profitability within your annual budget.
Foreign exchange exposure can have a huge impact on your business. Understandably, an increasing number of business decision-makers are looking for agile strategies that manage foreign exchange fluctuations and embrace market volatility. This is where dynamic expertise from a foreign exchange specialist, like Halo Financial, is immensely beneficial for maximising your budget.
Supporting better financial management for businesses in the new tax year
Our foreign exchange services are designed to help your business reliably forecast and manage your budgets more effectively. Our specialist knowledge, proactive communication and flexible services safeguard your business against currency fluctuations and international transfer fees that may impact your profit margins.
Expert guidance around foreign currency volatility
Making an international money transfer whilst the exchange rates are volatile could cause a loss in profits. Therefore, it’s essential to carefully monitor exchange rates and send money overseas at the optimum time.
Flexible money transfer options for businesses
● Automated orders – payments are only processed once an exchange rate hits your desired level
● Forward trades – set your exchange rate now and pay up to 12 months later
● Spot rates – set your exchange rate now and pay the same day
● Regular currency trades – set up regular international payments in advance.
Find out more information about our bespoke foreign exchange services for businesses here.
Reliable expertise from our currency specialists
Halo Financial’s foreign exchange services provide reliable support from a dedicated currency specialist to design a strategy tailored to your business needs.
By developing a deeper understanding of your business and your budget, we provide proactive risk management strategies to help you manage your foreign exchange budget.
Our industry-leading client service includes 24/5 exchange rate monitoring and regular currency updates. This ensures that you’re making informed decisions with competitive exchange rates that protect your business.
Are you ready to remove the stress of managing your foreign exchange budget in the new tax year? Register for a free account with us today.