Beyond Budgeting Vs. Traditional Budgeting

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Beyond Budgeting Traditional budgeting processes are increasingly being viewed as obstacles to progressive managers in the control and management of their companies. Financial statements made using traditional procedures are often too complex, long, inflexible, cannot be adopted in the market quickly, and demotivates people in organizations in their performances. Traditional budgeting also requires a lot of effort to make hence the need of new budgeting systems. This is how beyond budgeting concept came into being as accountants sought for new accounting strategies that are more vibrant and able to steer business organization to success through focused budgets. The changing business environment has warranted the new budgeting strategies.…show more content…
BB gives businesses a number of advantages that include the provision of more adoptive procedures for accountants to use while preparing their budgets as compared to those applying in traditional budgeting. The concept decentralizes the budgeting process unlike the traditional processes where business executives have always controlled and managed their organizations. The BB uses the entire management in the budget making process, which in turn enhances the performance, and management processes of organizations (Shim, Jae, and Joel 34). Evaluation of budgeting processes Business budgeting began in the early 1920s when the businesses started managing their cash flows and costs. By the 1960s, the businesses used budgets as contracting procedures between their management and subordinates about the performance of their organizations. Budgets were initially used as the tools for determining future incomes and expenditures, which was the primary concern for businesses then. Budgets were used as the key indicators for evaluating the performance of managers until the economic pressures of 1970s changed the competitiveness of the companies. Since then, various businesses have been operating in very volatile environments with modern business environment being very challenging to the businesses (Shim, Jae & Joel 1994). There were many expectations from the shareholders of businesses who expected them to be on top in terms of everything from profits,

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