Budget Management Analysis
Budget Management Analysis
Budget Management Analysis
A budget is a tool that helps managers to ensure that the required resources are obtained and used effectively and efficiently as the organization moves towards achievement of its objectives. A budget is stated in terms of money and is usually made for one year depending either on the prior year’s budget or on existing programs (Cleverly & Cameron, 2007, p. 330). Creating a working budget is a very difficult undertaking, and for the budget to be functional, an organization must stick to the budget very closely. No matter how closely a budget is followed, there will be variances. Organizations can expect such variances and be able to work such situations into budgetary constraints. This paper assesses certain situations in which budgeting, forecasting, and variance interact.
Managing the Budget within the Forecast
According to Cleverly & Cameron, (2007, p. 331), when management is done by many different people, budgeting becomes imperative. As a result, the organization needs to have a person in charge of finances who knows how to manage the money. Several strategies have been found to be very efficient in ensuring that this is achieved. The first strategy is to forecast important budgets when a one-year budget is created. The capacity to anticipate as operations grow or worsen allows time to react rather than acting under pressure. This tactic also drives an individual toward the establishment of effective monetary policy (Deschamps, 2004, p. 648). Good management needs policies that limit debt, govern balances, and minimum reserves. The second strategy is budget should be able to recover many expenses. As much as a business usually has some very mandatory needs, whenever something is not so pertinent to the function of the business, this cost should be saved. In health care, the extra expense can be recovered by placing cost on the essential services in the facility. The third strategy is the
Budget Management Analysis
A budget is a tool that helps managers to ensure that the required resources are obtained and used effectively and efficiently as the organization moves towards achievement of its objectives. A budget is stated in terms of money and is usually made for one year depending either on the prior year’s budget or on existing programs (Cleverly & Cameron, 2007, p. 330). Creating a working budget is a very difficult undertaking, and for the budget to be functional, an organization must stick to the budget very closely. No matter how closely a budget is followed, there will be variances. Organizations can expect such variances and be able to work such situations into budgetary constraints. This paper assesses certain situations in which budgeting, forecasting, and variance interact.
Managing the Budget within the Forecast
According to Cleverly & Cameron, (2007, p. 331), when management is done by many different people, budgeting becomes imperative. As a result, the organization needs to have a person in charge of finances who knows how to manage the money. Several strategies have been found to be very efficient in ensuring that this is achieved. The first strategy is to forecast important budgets when a one-year budget is created. The capacity to anticipate as operations grow or worsen allows time to react rather than acting under pressure. This tactic also drives an individual toward the establishment of effective monetary policy (Deschamps, 2004, p. 648). Good management needs policies that limit debt, govern balances, and minimum reserves. The second strategy is budget should be able to recover many expenses. As much as a business usually has some very mandatory needs, whenever something is not so pertinent to the function of the business, this cost should be saved. In health care, the extra expense can be recovered by placing cost on the essential services in the facility. The third strategy is the