How can you track and report actual results against the operating budget?

To monitor and report actual financial performance against the operating budget: 1. Prepare a comprehensive budget. 2. Implement financial accounting software for real-time data recording. 3. Maintain regular updates to financial records. 4. Conduct periodic comparisons between actual and budgeted figures. 5. Analyze and investigate financial variances. 6. Modify the budget when necessary to align with actual results, after necessary approvals. 7. Present performance reports to stakeholders. 8. Implement strategic measures based on financial analysis. 9. Continuously track and project future financial outcomes. 10. Document the entire financial process for continual enhancement and enhanced transparency.

It is imperative to monitor the budget variances monthly. It helps you track if a service has not been implemented which affects your monthly operating costs. Also, your leasing revenue numbers for new leases and tenants. Often times, the leases are later than budgeted which triggers overall NOI variances. Reviewing monthly expense costs is important so that any CAM billings need to be adjusted in 3rd quarter to true up tenant billed expenses.

Create and maintain budget to actuals. There are a lot of variables to consider, like whether to use actual cash payments as your “actual,” or tying it more to revenue if there’s a large delay and payments. These are the types of conversations you’ll have internally and with banks when obtaining loans.

Identify the KPI's and define them with very clear objectives. Improve and maintain all records constantly Communicate clearly and often.

Step 1: Define Reporting Period Decide on the frequency of your budget variance report (e.g., monthly, quarterly, etc) Step 2: Establish Budgeted Figures Obtain the budgeted figures for the reporting period. This could include revenue projections, cost of goods sold, operating expenses, and other relevant financial metrics. Step 3: Collect Actual Results Gather actual financial data for the same period. This might involve extracting data from your accounting software or financial statements. Step 4: Categorize Budget and Actual Data Break down both the budgeted and actual figures into categories. Common categories include revenue, expenses, and net income. Further, you can break down expenses into operating expenses, cost of goods sold.

Accounting Software: Automation: Accounting software can automate many aspects of the budgeting process. It can import financial data directly from your transactions, reducing manual data entry errors and saving time. Real-time Updates: Accounting software often provides real-time updates, ensuring that your budget variance report reflects the most current financial information. Dashboards and Graphs: Many accounting software solutions offer customizable dashboards and graphs, making it easy to visualize and analyze budget variances. This can help stakeholders quickly understand the financial performance of the business.

Ratio Analysis: Conduct ratio analysis to assess key financial ratios (e.g., profitability, liquidity, efficiency). Compare these ratios with the budgeted values to identify areas of improvement or concern. Trend Analysis: Evaluate trends in financial performance over multiple periods. This helps in understanding the direction of the business and identifying patterns that may contribute to variances. Variance Analysis: Perform a detailed variance analysis to break down the differences between actual and budgeted figures. This can involve examining variances in revenue, costs, and other key financial metrics.

Written Reports: Prepare comprehensive written reports that clearly outline the budget variances, their causes, and the recommended actions. Use a structured format, including executive summaries, detailed analyses, and a section for recommendations. Presentations: Create visually engaging presentations to present the budget variance results. Use charts, graphs, and visuals to make the information more accessible and highlight key points. Keep the presentation concise and focused. Meetings: Schedule meetings with relevant stakeholders to discuss the budget variance results in person. This allows for interactive discussions, questions, and clarifications. Ensure key decision-makers are present to facilitate prompt decision-making.

Regular Review Cycle: Establish a regular review cycle for the operating budget. This could be monthly, quarterly, or semi-annually, depending on the dynamics of your business and industry. Utilize Budget Variance Report: Use the budget variance report as a foundational tool for the review process. Identify areas where actual performance deviated from the budget and analyze the underlying reasons. Adjust Revenue and Expense Projections: Based on the insights gained from the budget variance analysis, adjust revenue and expense projections in the operating budget. This ensures that future budgets more accurately reflect the business environment. Set New Targets and Goals: Incorporate lessons learned from the budget analysis.