Each enterprise should be actively used this management tool as budgeting income and expenses (hereinafter - BDR).What it is?Try to understand this article.
Basic definitions
each business entity is characterized by its own system of MDD, depending on the choice of strategy of financial planning, as well as goals.Therefore, by defining the MDD, what is it and what is its purpose, it should be understood that as the management technologies in any company it purports to achieve their goals and use its resources and tools.
budget is for both the company as a whole and for its individual units.Making a budget of income and expenses is the work plan coordinated by all structural units, which combines separate budgets and is characterized by the information flow for management decisions in the field of financial planning.This budget is considered in terms of the total planned income and cash flows.Thus, responding to a question about the BDR - it can be argued that it is the result of many discussions and decisions in the future about the fate of the company, which contributes to its efficient operational and financial management.
calculations are carried out with the formation of the budget, allow time and in full to determine the amount of money necessary to implement the decisions taken.In this case we are talking about the formation of the sources of these funds (for example, borrowed or your own).
Evaluation BDR
What is the concept and how it can be measured, can be judged only in the paniruemom period.So, how manifest flexibility of a business entity due to anticipation of the results of administrative action, the effect depends on the development of the budget.Financial Planning and Budgeting involves determining the basic settings for each individual subject areas of activity, as well as the calculation of the various options with the preparation of the response to possible changes in the internal and external environment.
Options budget
These functions depend on the phase formation and implementation of MDD.At the beginning of the reporting period, the financial document is a plan of sales, expenses and other financial transactions in the coming year.By the end of the reporting period, he was playing the role of the appraiser (meter), by which it is possible to compare actual and planned figures for adjustments in follow-up business.
features CFB and BDR are similar and can be represented by the following list:
- analytical (correction strategies, rethinking ideas, setting new goals and analysis of alternatives);
- financial planning;
- financial account (you must ponder and take into account the actions already committed in the previous period to make good decisions in the future);
- financial control (comparison of objectives and results, identifying strengths and weaknesses);
- motivation (understanding to form a plan, punishment in the event of disruption of its implementation and promotion in the performance and were surpassed it);
- coordination;
- communications (harmonization targets structural divisions of the enterprise, finding compromises and consolidation of responsible for this or that point of the plan).
comparing BCF and BDR
BDR (budget of income and expenses), as well as CFB (cash flow budget) - the main financial documents that must be submitted, for example, banking institutions in obtaining credit.However, between the two there is a difference:
- CFB uses the cash method, the BDR - accrual;
- BDR is planning net profit and using CFB planned cash flows;
- BDR is reflected in the digital material without indirect taxes such as VAT and excise duties, and CFB all parameters are specified with these taxes;
- these two documents have differences in structure: in MDD has articles related to depreciation and revaluation, and BDS there are articles on the preparation and return of borrowed funds;
- and, of course, differences in the appointment of these documents: MDD is used to calculate the planned cost, profitability, revenue and profit, and CFB need to monitor cash flow on hand and current accounts of the enterprise.
main stages of the budgeting at the enterprise
The first stage is the formation of the financial structure and aims to develop a model of such a structure, which would allow to establish the responsibility of the execution of the budget and control of sources of income and the origin of expenses.
The second stage involves the formation and structure of the budget is defined as the general scheme of the consolidated budget of the subject of managing.At this point, special attention deserve the expenditure in the budget of the enterprise.
As a result of the implementation of the third stage is the formation of accounting and financial policy of the enterprise.In other words, it creates a set of rules of accounting, operational accounting and production subject to the restrictions adopted in the preparation of the budget and monitoring its implementation.
fourth stage is associated with the development of processes and procedures for monitoring, planning and analysis, in the event - the reasons for its failure.
And finally, the fifth stage is already linked to immediate implementation of the budgeting system.It includes jobs that are associated with the preparation of financial and operational budgets for the period ahead, conducting relevant analysis, the results of which can often introduce some adjustments to budgets.The result should be sfomirovany income and expenses of the enterprise in the required sizes.
Three approach to budgeting
In modern literature there are three approaches by which the articles are formed MDD:
- «bottom-up»;
- «top-down»;
- combined.
first approach used in large enterprises, in which heads of departments to budget departments or sections, which are further reduced in the budgets of the shop or factory as a whole.A prerequisite is the organization of the budget approval middle managers performance with senior management of the company.
example BDR second approach shows that the budgeting process is carried out by top management and lower-level managers of departments involved is minimal.
third approach is the most balanced and contributes to avoiding possible negative effects of the two previous approaches.
Advantages budgeting
Like any economic phenomenon, budgeting has both positive and negative sides.The advantages include:
- contributes to motivation and positive attitude of the collective;
- coordinates the work of the team as a whole;
- through regularly conducted analysis allows time to adjust the budget;
- is a tool for comparing planned and actual results.
Disadvantages budgeting
Among the major shortcomings should be allocated as follows:
- differences in the perception of the budgets of different people;
- high cost and complexity of the budgeting process;
- lack of motivation of the budget if it is not brought to the knowledge of all employees.
