Budgeting and forecasting in Xero allows you to plan and project your business’s financial performance, helping you make informed decisions and set financial goals. Here’s how to set up and use the budgeting and forecasting features in Xero:
1. Log In to Xero:
- Start by logging in to your Xero account using your credentials.
2. Access the “Accounting” Section:
- From the Xero dashboard, navigate to the “Accounting” section in the left-hand menu.
3. Set Up Your Budget:
- In the “Accounting” section, select the “Budgets” or “Budget Manager” option. If you’re setting up a budget for the first time, you may need to create a new budget.
4. Create a New Budget:
- Click on the “Create a New Budget” or similar option. You’ll typically need to provide details for the budget, including the following:
- Budget Name: Give your budget a descriptive name.
- Budget Period: Specify the period for which the budget applies, such as the fiscal year.
- Budget Type: Choose between “Fixed” or “Rolling” budgets. Fixed budgets remain unchanged for the specified period, while rolling budgets allow you to update them regularly.
- Budget Start Date: Set the start date for the budget.
- Budget Due Date: Specify the due date for the budget.
5. Configure Budget Categories:
- Define the budget categories or accounts that you want to include in your budget. This typically includes revenue, expenses, and other financial categories. You can add, edit, or delete budget categories as needed.
6. Enter Budget Figures:
- Enter the budgeted figures for each category based on your financial projections and goals. You can input these figures on a monthly or annual basis, depending on your budget period.
7. Save and Finalize the Budget:
- Once you’ve entered all the budget figures, save and finalize the budget. You may have the option to review and approve the budget before making it active.
8. Monitor Budget Performance:
- After setting up your budget, you can monitor your actual financial performance against the budgeted figures. Xero will automatically compare your actual income and expenses to the budgeted amounts and display variances.
9. Generate Budget Reports:
- In Xero’s “Reports” section, you can access budget-related reports to analyze your budget performance. Look for reports like “Budget vs. Actual” to compare your budgeted numbers with actual financial data.
10. Adjust and Revise the Budget: – Throughout the budget period, you can adjust and revise your budget as needed. Rolling budgets allow for ongoing updates to reflect changes in your business.
11. Forecasting (Optional): – Xero also offers forecasting tools that allow you to create financial projections based on historical data and assumptions. You can use these forecasts for long-term planning.
Budgeting and forecasting in Xero are valuable tools for managing your business’s finances effectively. By setting up budgets and regularly reviewing your performance against them, you can make informed decisions, identify areas for improvement, and work towards your financial goals.
Is juggling invoices, bills, and payments consuming too much of your time? Entrust your accounts payable to our dedicated bookkeeper for small business, ensuring that all bills are paid accurately and on schedule.