¶ … budget management analysis, it generally looks at how budgets can be effectively managed so as to be in line with the forecast that was earlier made. The first section of the easy spells out different strategies that can be applied to effectively manage budgets. The second section looks at budget variance and how they arise and what strategies can be used to remove them. The last section of the study will indicate three bench marking techniques that can be used to improve the accuracy in future forecast.
Strategies to manage budget within forecasts
Budget as a financial plan is based on expected future activities and is used to control that activity and hence it is possible to make a number of forecast of the financial outcome under different assumptions and the forecast which best meets the firm's or individual objective and is within its capabilities is chosen as the budget. The individual or company's management must then convert the budget into a plan which must be put into action. For individual we term our budget as simply personal budget while companies or business organizations budget have varying budgets that include; the sales, production, general and administrative, cash and the master budget.
The first strategy on how to manage budgets within forecast after they have being agreed upon is to appoint a manager who will be responsible to ensure that the whole organizations maintain their spending within the estimated budget, he or she will also act as coordinator among different departments to ensure that each and every department of the organization limit their expense to the budget.
The second strategy of which is echoed by New York's mayor Mr. Bloomberg who is also a business leader is to always allocate more funds than the budgeted funds, this small proportion left is to cover for emergencies and unexpected expenses, this in a way makes the budget flexible and assures the business of liquidity even in harsh economic times that were unexpected.
Adopting policies and principles...
Budget Management Analysis So much connected to the process of budgeting is difficult. It can be difficult to draft a budget which is accurate and which connects to all project needs. Moreover, it can be quite challenging to stay within the guidelines of a budget. However, organizations and projects must be held to that regardless for their present and future success, not to mention their own level of sustainability. Thus, whenever finance
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