The Importance Of An Organization Having A Pre Planned Budget

1433 WordsMar 7, 20166 Pages
In this research paper I will be explaining the importance of an organization having a pre-planned budget. Without the proper budgeting systems most organizations probably would end up spending more than their means which could ultimately cause a great amount of hardship. First let me start off by defining what a budget is, a budget can be defined as” the process of creating a plan to spend an organization or individual’s money. “ (Peavler, 2016) It’s always best to create a plan for a budget that is for six months to a year down the road. Spending plans are an entrepreneur 's arrangement of activity for the business firm. Without a financial plan, the entrepreneur is actually shooting oblivious with regards to attempting to arrange…show more content…
Proprietors need to check whether arranged. According to the article ” The Advantages of a Flexible Budget” flexible budgeting unlike normal budgeting which uses predictions to make a forecasted decision on how funds are to be budgeted in an organization. Flexible budgeting allows for an organization get an idea of how the production or sale volumes are going and allows for changes to be made. Fixed and Static on the other hand is a predetermined amount that is unable to be changed if things do not go as plan that is what makes the flexible budget more advantageous. (Davoren, 2016) The business environment around you changes quickly; thusly, you should adjust to these progressions to make your business an example of overcoming adversity. Utilizing an flexible budgeting plan places you in a superior position to oblige these progressions, make convenient operational alterations and take the best advantages from circumstances that exist in outside situations. For instance, in the event that you run a transportation and dispatch administration, you might see the expanding expense of gas and that travel costs are over spending plan. In the event that you utilize an adaptable spending plan approach, you could name options and set them set up to diminish the expense of these expansions. (Davoren, 2016) According to the source “Strategic Finance” author Renita Wolf states that : “The traditional annual
Open Document