Budgeting - a planning, development and monitoring of budgets, activities in all stages of the budget process. Budgeting part of the overall financial management, designed for optimal resource allocation of the legal entity in time.
Budget - is a quantitative expression of a plan for a specified period of time. It may include the planned sales volume, revenue, number of resources, costs and expenses, assets and liabilities, cash flows. It expresses the strategic plans of business units, organizations, actions or events in a measurable form.
Budgeting - a process. This means that budgeting - a set of activities carried out in order to prepare a budget for the company or business unit and monitor its execution. Depending on the type of the budget budgeting purposes and structure of the company the budgeting process may vary. But in any case, this process involves a few basic steps:
- consolidation of information and the creation of the draft budget;
- analysis and discussion of the budget;
- changing the budget on the basis of the received feedbacks and recommendations;
- budget approval;
- collecting performance data;
- analysis of the execution of the budget and making changes if necessary.
Usually distinguish two basic types of budgets:
- budget of income and expenses;
- cash flow budget;
The first type of budgeting is the most widely used. The second type - is typically used by companies with clearly distinguished function of the internal treasury.
Regardless of how the work is organized of the formation and approval of the budget, in the end there is a structured plan with specified targets for a certain period of time (usually monthly or quarterly) to budget planning cycle duration(usually a year or two) . At this stage, usually plan is finalized and starts collection of evidence of execution of approved budgets (facts).
Approach for gathering evidence strongly depends on the structure of business and accounting methods used by company. Today's IT solutions support the processes of budgeting and treasury and provide opportunities as gathering evidence of budget execution without reference to the primary operations and synchronous formation of the facts of each type of budget, and each type of detail budget articles simultaneously with the execution of operations in accounting.
Our experts are ready to offer you a participation in the organization of the budgeting process and the treasury in your company or group of companies, as well as to provide optimal support of these processes with the help of modern information technology.
We will be happy to answer any questions you may have.
