Budgeting for Business is said to be a multi tool because it plays the role of planning tool, control tool, communication tool and motivational tool. A budget is a realistic plan for the future in quantitative terms. Business ideas are usually formulated with the support of a clean budget. The importance of Budgets is not limited to the activities of business entity. Budget is an essential part of personal life as well. Household budgeting has gained much importance due to the increase in cost of living nowadays.
Concepts to remember while preparing Budgeting and forecasting
Preparing the budget is an art of evaluating the future. Budgeting for Business is very crucial since all the financial activity of the business is related to it. In order to practice this art for the business entity one should know the basic concepts of budgeting.
> Budgeting as a planning tool lays out in specific terms, an organization’s expectations about the consumption of resources and the resulting outcomes. The same way, it helps in planning household expenses and save money to a great extent. The planning process coordinates the efficient allocation of money and resource which will prevent wastage or loss.
> Budgeting as a control tool helps to keep a control on everything so that sudden change of the external factors in the business environment will not affect adversely.
> Budgeting as a communication tool will help in communicating the changes and precaution for the future in quantitative terms to the users.
> Budgeting as a motivational tool brings confidence to business people to face the future situations through efficient forecasting methods and formulating plans.
Quantitative methods of preparing Budget for Business
The budgeting has a significant role in the Business strategy of any organization. The success of any organization is deeply depends on the formulation its financial budget.
Coefficient of determination:
Budgeting for Business plays an important role in the success of any business organization, for making a successful budget for a business one should always seek help from experts in the field. The consulting team at Emirates Chartered Accountants group Dubai is very experienced in drafting out successful budget by considering the resources of the business. For more information visit www.emiratesca.com