Why Are Budgets Useful In The Planning Process
Camila Farah
Putting a budget together is only one part of the overall planning and control process in the business.
Part of budgeting responsibly is tracking actual revenue and expenses and comparing them to what was budgeted. Planning is a process oriented towards the future. And this is the first hint as to why are budgets useful in the planning process. Budgeting is the process of creating a plan to spend your money.
The cycle of planning and control begins with the setting of the objectives of the organisation. Budgeting is simply balancing your expenses with your income. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Aids in the planning of actual operations.
This is essentially what the business wants to achieve over a sustained period of time. Necessity of budgets in planning and controlling of a company s activity. Briefly a plan specifies in one form or another what the management intends to do. They are both looking towards the future.
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Budgeting and business planning once your business is operational it s essential to plan and tightly manage its financial performance. The cycle of planning and control. Goals of the budgeting process. The process gets managers to consider how conditions may change and what steps they need to take while also allowing managers to understand how to address problems when they arise.
In general the management can control some of the variables such as. Having a budget keeps your spending in check and makes sure your savings are on track for the. The need for budgeting the budget is considered an important management tool that is a quantitative statement of a plan of action for some specified period of time. Budgeting is a critical process for any business in several ways.
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