Forecasting Finances to Ensure Calm for the New Year

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The end of the year can be a time for small businesses to reflect on the previous 12 months and begin planning for a prosperous 12 more. This is a natural and important process, but can also become an incredibly stressful, make-or-break one when the future seems nebulous or the past was rough.

It doesn’t have to be. The end of the year offers the freedom to make changes and take calculated risks by resolving to set your sights on longer-term financial prosperity, rather than remain entrenched in the overwhelming uncertainty of today. Plus, by developing good habits today when forecasting finances, next year’s process should be less stressful and more serene.

What follows are a few tactics small businesses can immediately adopt when forecasting finances to ensure they enter the new year in a position of strength.

Best Practices When Forecasting Finances

Audit Current Accounts and Bank Statements

Though small businesses may be reticent to do so, the most important first step is to conduct a thorough review of where finances stand at the end of the year. Not just a surface-level skim of account balances either: It’s imperative that companies dig into the details of the last 12 months to uncover outstanding invoices, cashflow forecasts, nonnegotiable expenses like rent and wages, and each individual line item on tax forms.

Yes, it’s a daunting task. But above all else, the most important factor in successful financial planning is accuracy. Without it, the entire process is rendered moot.

The key aspect of this when forecasting finances is to establish a repeatable cadence throughout the following year. This way, the mammoth task of consolidating records at the end of the year can be broken up and double-checked along the way, ensuring the entire organization is in sync leading up to December.

Go Paperless

An audit is just the beginning. For lasting change to occur when forecasting finances, it’s important for small businesses to maintain an organizational system for past and future documents, ensuring nothing is lost and everything is prepared for next year. Now is the perfect time for companies to digitize their records if they haven’t already, or revisit the current system and maximize it for full-company visibility. That way, team members of all stripes can quickly monitor for human error.

Here are some suggestions for what to digitize first:

  • Accounts receivables
  • Accounts payables
  • Written off invoices that can’t be recovered
  • Employee’s payment summaries
  • Receipts

Lean Into Technology

Today, there are plentiful accounting software platforms that manage a business’s finances at all stages of operation. Many of these include AI functionality that can automatically organize expenses, automate workflows, and produce holistic financial forecasts and analysis.

However, not all platforms are simple to use and understand, or easily integrate into current business practices.

The trick is to know what to look for:

First, ensure your software offers end-to-end accounting.

This helps businesses implement a holistic approach—from deal negotiation, to raising sales orders and invoicing—that unlocks the potential for every employee to benefit from the new technology on offer. Plus, this ensures that automation, which frees employees up to focus on financial tracking and gain, permeates the entire business, saving time and resources.

Second, it’s imperative that you guarantee that your potential accounting platform can be easily integrated across your organization, even for externally facing stakeholders, to increase adoption.

Though it may seem reckless to include so many folks, most platforms allow for role-based access, meaning executives can permit certain individuals to view and manage aspects of an account or process without removing the guardrails.

Much of the above process can be complicated when negotiating between multiple vendors—one for CRM, another for invoicing, etc.—which is why it’s worth considering an unified system under the banner of a single vendor, as we do at Zoho. When one piece of unification works, they all do.

By implementing the above into daily business now, you can develop good habits and best practices when forecasting finances that will ease the stress of this process for many years to come.


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