Mentioning the word budget always draws mixed emotions from different people.
Budgets are most often associated with a tedious exercise that results in inaccurate estimates which almost always requires explanations.
Well, this isn´t exactly wrong either. It is true that historically or even currently, many businesses are still faced with the same challenges.
Nonetheless, budgets are usually used for two primary reasons – PLANNING and CONTROL.
Regardless which primary function the management of an organization picks, preparing a budget is done in various ways.
Some businesses utilize a top-down approach and others a bottom-up approach. Some revise their budgets quarterly and some stick to it throughout the year. Some use flexible budgets to evaluate performance while others compare results against original estimates.
Bottom line is that a budget can be a pretty powerful tool that aids in attaining organizational goals and in order to achieve the desired optimal effect of a budget, here are a few points to keep in mind.
- A budget is your organization´s plan
- It is a form of exercising control
- It helps employees understand what needs to be done and how it should be done
- It extends the reach of the top management
- It is used to collaborate activities across departments/business units
- It is used to communicate the company´s goals and objectives
- It is used to guide day to day business operations
- Its effectivess is anchored on its timeliness and relevance
- It can be used to reward performance or evaluate performance
- It can lead to mind games and manipulation tactics within the organization
BUDGETING WITH PERFORMANCE CANVAS FINANCIALS
Performance Canvas Financials is a budgeting and reporting tool that works as a supplement to your existing ERP system. It includes an enhanced and user-friendly interface to make budgeting less tedious but more powerful.
With Performance Canvas, you do not need to be an Excel expert in order to use the product and it will give you an intuitive workflow to make budgeting feel more effortless.
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