How to Forecast and Budget Company Expenses with an Irregular Cash Flow

Posted by Alyanna Tagamolila
Nov 17, 2014
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The daily cash flow in one’s operations is considered the heartbeat of a company and determines the financial standing of your entire organization. Because of this, having an irregular cash flow raises quite a challenge when it comes to budgeting your monthly expenditures. How can you base your plans on something constantly changing?  

Though it is indeed hard, the good thing is it is quite possible to create a budget despite your company’s irregular cash flow. To do this, you just have to note all the fixed variables such as monthly operational costs and balance it out with non-constant expenses. 
Here’s what you need to track to be able to create and stick to a budget plan that works for you: 


Accounting Fixed Expenses 

Fixed expenses are recurring and almost unchanging costs of running your business. It includes payroll, phone bills, office supplies, employees’ insurances and such. These are what you can consider the most central sources of your cash outflow, so make sure that these are all accounted in your budget. Also, keep track of any minor changes like an increase in your office space rent or a change in your internet access plan payment and update your cash flow forecasting for the following year. 


Read: 4 Common Mistakes to Avoid in your Company's Finances  


Estimating Variable Expenses 

Variable expenses are not entirely different from fixed expenses. You must pay for these monthly; however, their actuals costs vary from time to time. Examples of such are electricity, water, gas, A/C and heat, etc. To have an accurate estimate, you have to consider your workforce’s total and actual consumption, then compare them monthly to get the average. This can hit two birds with one stone – this can be your input value for your cash flow budget, and you can pinpoint which variable expense you can minimize to cut your costs in the long run. 

Limiting Luxury Expenses 

Feeling the need to have the latest gadgets and equipment? Don’t fall prey to the itch; consider the Return of Investment (ROI)of every probable purchase because this determines if something is a real investment or just a luxury. You may also want to search for less expensive yet quality items in favor of your first option. By thinking twice before purchasing and managing your company expenses, you will be able to wait for your cash flow to be more stabilized and put you in a better position to make financial decisions. 

Estimating Monthly Revenue 

We have already established he necessity of revenue forecasting. While it might be difficult to pinpoint exactly what your expenses will be for the succeeding months, it is still possible to have an estimate, which could help you in making important business decisions to make your critical business numbers. 

Expecting the Unexpected 

This simply means expecting for the worst. Assess the performance of your business and prepare an emergency fund in cases when the revenue is dipping for that period of time. There is also the option of obtaining short-term business loans, but make sure that the terms and conditions fit your cash flow budget as well. 

Overall, while the numbers will definitely vary per month, by knowing how to control and adjust all the variables, you will be able to create a company budget that is manageable for your company’s operations. Allowing you to remain profitable and giving you the freedom to make financially sound decisions for your company’s growth! 


Read Next: Five Ways to Save Company Money and Reduce Business Expenses  


Need help with managing your company’s expenses? 

We have a wide expertise in handling the numbers of companies across various industries as we make sure their books are maintained and offer valuable insights into data-driven financial forecasts. Contact us today and we'll help you manage your expenses today! 

Download our Outsourcing: How to Make it Work guide today and know how we can be your reliable outsourcing partner.  

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This post was first published on 17 November 2014 and edited 18 August 2023.  Edited by: Aly Tagamolila    





Our Outsourcing: How to Make it Work guide explores how you can utilize accounting and finance outsourcing to drive growth to your business and add value to your processes.