Developing A Budget As An Effective Management Tool

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Assignment 5 Introduction The increasing costs of health care are a significant problem in the United States (Stephens & Ledlow, 2010), therefore it is important that health care organizations develop and implement efficient organizational budgets. A budget is a management tool used by an organization, which aligns the organization 's finances with its mission, revenues, expenses, and evaluates the financial results with what was budgeted for (Nicolae & Anca, 2010). Consequently, it is important that the organization include its budget with the strategic planning process. As a result, the budget can be used as an effective management tool, a process to uphold the mission, and to ensure the integrity of the budget. The purpose of this paper is to evaluate the strategic budgeting process. Developing a Budget: Budget as an Effective Management Tool Overall, the budget can be defined as a type of financial plan, which includes the calculation of revenues and expenses for a specific time-period (Nicolae & Anca, 2010). Therefore, it is best that organizations integrate strategic planning, capital and financial planning, capital allocation process, and the budget development and implementation process (Sussman, 2003). Every health care organization should develop a strategic budget; however, the budget alone will not provide real financial guidance to the organization unless it is developed along with the strategic and financial planning process (Sussman, 2003).
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