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Budget Planning For The Fiscal Year: When, Why, & How

Budget Planning For The Fiscal Year: When, Why, & How

 

Are you starting a new fiscal year soon? It may be time to budget plan and gear up for the next financial year ahead. While seasoned budgeters know this process all too well, it’s always a great time to brush up on fundamentals and learn how you can use tools to streamline your process!

As many of you know, a fiscal year (FY) is a one-year period that companies and organizations use for accounting purposes and preparing financial statements. It serves as a reference for budgeting and financial reporting and does not necessarily align with the calendar year. A fiscal year is identified by the year in which it ends; for example, if a fiscal year ends on May 31, 2024, it would be referred to as FY2024.

Fiscal years are determined for many reasons, often depending on the organization type. For example, nonprofit organizations tend to align their fiscal years around grant awards or donation influxes. A business or for-profit organization might want to have its fiscal year conclude after it typically has a large spike in revenue each year. Schools or universities often align their fiscal years to when class is in session.


When To Budget For The Next Fiscal Year

In our experience, budget preparation for the next fiscal year should begin around three to six months before the current fiscal year ends. Since every organization looks a little different, that can mean any month of the year! It’s always important to plan ahead with your department and leadership, as well as get all employees on the same page. This way, there is enough time to dissect how last year’s budget faired, adjust, and get everyone on board for the next fiscal year.

In terms of tax preparation, fiscal-tax payers must file their business taxes on the fourth month and 15th day following the end of their fiscal year. Referencing our original example, with a fiscal year that ends on May 31, 2024, an organization has to submit its tax return by September 15, 2024.

 

Why Budgeting Effectively For The Next Fiscal Year Matters

Correctly budgeting within a fiscal year is a strategic move to set your organization up for success. It influences every facet of your nonprofit, business, church, or school, including:

  • Alignment with business cycles and allocating resources efficiently
  • Tax considerations and careful financial or cash flow forecasting
  • Performance tracking and comparing to predetermined goals
  • Regulatory compliance, particularly for public or nonprofit sectors
  • Stakeholder confidence to showcase financial responsibility and health
  • Budget prep and approval cycles to implementation

 

How To Budget For The Next Fiscal Year

Because of a fiscal year’s structure, December is not the end of the year – making it different than most people’s personal financial planning. How can an organization budget effectively with the fiscal year in mind? Budget managers can:

  • Start with a review of the current fiscal year’s budget and how it performed
  • Align all budget planning with your organization’s goals
  • Estimate the revenue and expenses for the upcoming fiscal year
  • Plan for contingencies and create any financial cushions or savings
  • Include relevant stakeholders, department heads, employees, and investors
  • Continually adjust the budget with a flexible tool through the fiscal year

 

In today’s dynamic and technologically driven financial environment, leveraging cutting-edge tools can transform the budgeting process. Your organization needs a tool that promotes flexibility, collaboration, and accurate information to keep you on track.

Want to budget better this next fiscal year? Martus is a Cloud-based budgeting, forecasting, and reporting tool that allows organizations and businesses to create, execute, and analyze budgets with ease. Martus’ Budgeting Tool allows you to:

  • Leverage the latest intuitive technology
  • Encourage collaboration among departments & leadership
  • Prioritize financial transparency & clear reporting
  • Stay flexible and always be ready to make budget changes as needed

Martus Budgeting can guide you through the next fiscal year and make your budget management a whole lot easier! For more about Martus, learn about what we do or request a free demo today!

 

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