To review your budget

When reviewing the Analyze Balance Sheet report, begin by looking at the $ Difference column on the right side of the report. This column shows the difference between the amount you budgeted to spend during the month and the amount you actually recorded for each account in your accounts list. Many accounts will have a slight variation from the amount you've budgeted-that's normal. What you're concerned with is an unusually large departure from the amount you've budgeted.

Here are some differences that should be of particular concern to you:

• Sales accounts that are lower than projected.
• Expenses that are higher than you'd planned. If your expenses often exceed your expectations, you may need to put spending controls in place.
• Wage or salary expenses that are different than you'd planned. This could mean you're paying more overtime than you'd planned to, for example.
• Inventory balances that are significantly different than you'd projected. This could mean that you've got too much-or too little-inventory on hand. Both of these situations can create a financial drag on your business.
• Accounts payable that are higher than expected. Accounts payable need careful management to ensure that you're not paying your bills before you have to, but also aren't losing discounts and paying unnecessary interest charges.
• Accounts receivable that are higher than expected. This may mean that your customers are taking longer than anticipated to pay off their accounts with you.

Any significant variation from the amount you've budgeted deserves further investigation, but these are key areas for you to consider.

Idea: If you need to change your budgets

Make a note on the report of any changes that are needed to your budgets for future periods. That will make your next task-adjusting the budgets-easier.