Budgeting, A Financial Asset of the Corporate World

Abstract

To maintain the financial action plan in the organization budgeting plays a very important role and it steers the path of business towards growth or failure. Based on the size and nature of the business, the organizations can maintain the operational budgets for directing the entire company, or individual or department-wise budgets that can be maintained for allocation of the expenses according to different budgets. Companies can easily guide their efforts towards organizational goals by planning the expenses and revenues in concrete form. The controllable cost that occurs while preparing the budget is taken into consideration by the managers. And if unfavorable variances were found then efforts are made by the managers in the key areas of variances. 1 Budgeting is an essential factor to work and complete the projects in most of the organization. Budgeting is an integral part of the organizational control system, which is used as an accounting tool in the execution of strategy. The success of the organizations depends upon the quality of the budgeting process. It helps the business with better planning and control over the business. In the absence of control, there will be no use of planning and without planning no goals can be achieved. When the sales and revenues are irregular or customers delay in paying money than in such situations executing the budgeting process is a difficult task for companies. Different types of budgets are prepared by the companies including fixed to flexible or operating to master budgets. These budgets are prepared based on the working requirements of companies. Budgeting is an important part of running every business; it is maintained in government, corporate, companies, households, schools, etc. It is a kind of action plan which serves as a managerial tool to companies as well as to the people associated with it.