Budgeting

All businesses use a budget for planning purposes. It will help keeping your business in a proper direction by forecasting your cash needs and controlling your expenditures. Preparing a meaningful and realistic budget requires professional expertise as well as experience. In other words you can say that a budget is a written record of income and expenses during a specific time frame, typically a year.

"Budget" by different views:

A Budget is
o An itemized summary of estimated or planned expenditures for a given period of time
o A systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period.
o The total sum of money kept for a particular purpose or period of time: a project with an annual budget of some particular project said to Budget.

A well known analyst mentioned in one of his book: "Budget means a plan for saving and spending."

The purpose of budgeting is to:

o Provide a forecast of revenues and expenses i.e. construct a model of how business will perform financially if certain strategies, events and plans are carried out.
o Enable the actual financial operation of the business to be measured against the forecast.

It can take place at any time, for many businesses, planning a budget is an annual task, where the past year's budget is reviewed and budget projections are made for the next three or even five years. The basic process of planning a budget involves listing the business's fixed and variable costs on a monthly basis and then deciding on an allocation of funds to reflect the business's goals. And if you're planning on starting a business, planning a budget plays an important role in determining your start up and operating costs.

If we talk about the corporate budget, generally the budget of a company is compiled annually. A finished budget usually requires considerable effort and can be seen as a financial plan for the new financial year. While planning a budget in any company, there is some special budgeting software available this can make easy process of "Budget Making".

Types:

o Sales Budget
o Production Budget
o Cash Flow / Cash Budget
o Marketing Budget
o Project Budget
o Revenue Budget
o Expenditure Budget