Budgeting, Financial Management

Budgeting:

All business owners should recognise and understand the importance of preparing and maintaining a financial budget for their business.

Budgets are an essential financial planning tool, a method of control over the day to day operation of the organisation, and an opportunity to involve people at all levels in the budget planning and implementation process.

In many cases of business failure the major contributing factor was the inability of the organisation to either comply with a predetermined budget, or a failure to prepare a budget at all.

Budgets have a number of purposes, including:

  • Assist organisations control financial and overall business results organisation
  • Assist in decision making
  • Aid in coordinating various functions and activities that make up any organisation
  • To assign responsibility to managers or staff for achieving levels of performance, and to authorise amounts that those staff can spend
  • Motivate managers / staff to obtain commitment to achieving budgeted goals
  • Increase the credibility of the organisation in the eyes of third parties

Budgeting and budgetary control can be regarded as a combination of forecasting, planning, and monitoring financial results against plans.

By forecasting aspects of revenue and expenditures (using available information), and then following up with regular comparisons of actual results against budget, managers can determine what action if any should be adopted in order to:

  • Identify and address areas of poor performance
  • Improve areas which are performing well
  • Foresee any need for additional financing
  • Anticipate and plan for growth and/or changes in business circumstances
Posted Date: 10/1/2012 4:14:28 AM | Location : United States







Related Discussions:- Budgeting, Assignment Help, Ask Question on Budgeting, Get Answer, Expert's Help, Budgeting Discussions

Write discussion on Budgeting
Your posts are moderated
Related Questions
Bonds with Warrants: Warrants are usually attached with the bonds or preference shares to attract the investor. The objective is to induce the potential investors to subscribe

Definition of 'Bank Credit': The amount of credit available to a business or individual from the banking system. It is the aggregate of the amount of funds financial instituti

Capital cost of product a is ? 5 crores and initial capital cost of product b is ? 3 crores. Life of product a is 30 years and life of product b is 10 years . The difference in ini

A.I.G. is often called the largest insurance entity in the world. A.I.G.'s total assets were $860 billion on 12/31/2008 (dwarfing any other insurance entity) with 116,000 employees

Mergers and Acquisitions It is a Process of business combination. There are 3 forms of business combination: 1. M1.    M1 has the highest liquidity. This is the narrowest t

Define the meaning of Overtrading When  a  company  is  trading  at  a  very  fast  pace,  it  would be  generating  sales  on  credit  with  speed, so have a large volume of t

Q. Show the Accept-Reject Criteria? Accept-Reject Criteria:- If the actual payback period is not more than the predetermined payback period...................... Project

Question 1 State the key functions of the financial market. Question 2 Define "Bill of exchange". What are its features? Give different types of cheques. Question 3


What do you mean by pension funds? Pension funds: Pension funds give retirement income (as the form of annuities) to workers covered through a pension plan. They get cont