Budget Brawn

Carlson, Bethany; Palaveev, Philip
March 2004
Journal of Financial Planning;Mar2004, Vol. 17 Issue 3, p58
Academic Journal
This article recommends a basic step-by-step budgeting process and demonstrates methods for using the numbers from the Financial Planning Association's benchmark studies. A budget is a key tool in promoting the burgeoning or ongoing financial success of a business. Preparing a budget is a significant undertaking, even for a small firm. One person should therefore be appointed as a budget manager. This person should be responsible for creating the budget as well as supplying all managers with budget-to-actual reports during the course of the year. The appointment of the budget manager will, ideally, introduce a system of checks and balances into the firm. One of the most significant budgeting principles is that there should be a match between responsibility and control. The second principle is that employees should be given a chance to provide input into the metrics against which they will be measured. In addition to the need for departmentalization, a budget needs to be sequential--variables often depend on each other, and one budget variable will often have to be finalized before starting the process for another. Once the company departments have been defined, each can develop their individual budgets. INSET: Executive Summary.


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