What is Role of Financial Budget in business?

Simon Stuart | June 19, 2019

Every business needs to have a revenue target which they need to fulfill within a given time frame. There may be deviations from the path to achieving the objective, but eventually, we can attain the goal if we have a specific plan.

The path or road map that we need is a financial budget, and it is indispensable for the prompt and long-term success of our business. We can understand the bigger picture and prepare ourselves for any business challenges down the road.

What Does a Budget contain?

A budget gives us a snapshot of the revenues versus the expenses incurred by our business for a given period which could be a month, quarter or a year. This is our Cash Flow Management.

The Best Time to Create a Financial Budget

The right time to prepare a financial budget would be now! The budget should cover a minimum time frame that gives us enough insight into the future. A ballpark figure for the time frame would be 12 months so that we can get a perspective of the future business cycle for one year.

The Key Contributors to Creation of a Budget

The key workforce who should be involved in the creation of a budget would depend on the size and complexity of our business. Ideally, top or middle management staff who deal with the financial aspects of our business should be the key decision takers in preparation of a financial budget. Example of key personnel would include Director of Sales (well versed with revenue goals) and Operations Manager (who should be conversant with daily expenses).

Read More : - What Are the Benefits of Creating a Financial Budget?