Budget Management Analysis : The Budget

1084 Words Nov 29th, 2015 5 Pages
Budget Management Analysis The operational budget is a key part of any business or organization. It is a necessity for both profit and non- profit organizations. The budget is used to allocate financial, physical and human resources to achieve strategic goals (Best Practices, 2000). The budget shows how resources will be utilized; it should be linked to the overall strategic plan of the business or organization. Operational budgets should be aligned with the mission of the company; it should be aligned with the strategic plan of the company. It should be developed based on revenue analysis as well as projections for revenue; cash flow also impacts how budgets are developed. The budget should look at the priorities of the organization; it should benchmark the areas that are a priority and attempt to effectively utilize resources to meet goals. The operating budget should map out spending and expenses of the business for a period of time (budgeting period). The operating budget should focus on cost control and profitability. The involvement should include the owners, key employees such as the administrator, management team financial team and board members if there is a governing board.
The operating budget should be practical yet comprehensive. It does not necessarily have to be balanced; many new companies may not be able to predict or obtain a balanced budget during its initial phase. The budget must be reviewed routinely to assess the predicted budget versus the actual…

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