What's the best way to budget for fluctuating expenses?
Answered by:
Fairlie MacPhee
MacPhee's Accounting & Consulting Ltd.
21 Questions answered
Answered on September 16th, 2019
When you have seasonal fluctuations a monthly budget and cash flow statement are a necessity. The budget will help you prepare the cash flow analysis which will tell you when you will have cash issues. You can then try to arrange a short-term source of financing or cut back on spending during the rough period. You may also opt to reduce your spending during times of excess cash in order to fund the periods of negative cash.
Budgeting and planning tends to reduce the surprises and allows you to have more options for problem resolution as opposed to a fire fighting strategy with limited options.
1 Reply
Fairlie MacPhee
from MacPhee's Accounting & Consulting Ltd.
A good starting point is to look at last year's expenses and forecast whether those items will go up or down depending on the projected activities in the coming year. Then, try to anticipate any new expenses that may be incurred from the planned activities.
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