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It is important for the entre-preneur to  develop serious bud-geting of your resources, before and after you implement your business, especially if your capital and other resources are exhaust-ible. Look at the tips on this page. If they can help you. Feel free to use them.'s

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About this Page

 Since the funds by which the different sectors of your organization operate usually come from the members of such organizations and the public, it is necessary that transparency of your organization's financial operations be maintained at all cost. One of the basis by which this could happen, is to through the construction of proper budget prior to the start of a organizationís operating year.


What is a Budget

The budget of an organization  is a formal financial plan that lays out the entityís future operations expressed quantitatively, for the purpose of controlling its finances and in turn, its operations.


 The budget of an entity should show:

    a. What the financial needs of that entity are.

    b. Why the funds are needed by the entity.

    c. In the case of non profit organizations, what  pledges members

      are responsible for pledging,   towards meeting the needs of the


    d. How the budgeted funds, when collected, would be expended.


Types of budgets

There  are a number of  different types of budgets that may be adopted by an organization. These are as follows:


The Comprehensive Budget


1.  This budget is a total management plan for the whole entity. Such may be made up of any number of sub budgets, as dictated by the needs of the entity. All aspects of the entityís operations, that is, what the company does,  must be included in this budget.


The comprehensive budget consolidates all aspects of the entity, for example, cash, accounts receivable, all funds needed.


2. The Partial Budget:


This occurs when a separate budget is made for each segment of the entity in relation to its needs.  It is important that each of these elements follow the master plan of the entity and its chart of accounts.



Benefits of Budgeting


The following are some of the major benefits that organization can get from proper Budgeting:


1. Budgeting forces the management of entities to reconsider and evaluate its basic objectives and policies on a regular basis.


2. Budgeting requires the assembly and analysis of historical accounting and statistical data as a basis for making projections into the future. This brings to light relationships that might otherwise not be noticed.


3. Budgeting demands that assessments be made of the impact of external socioeconomic forces on the operations of the entity.


4. Budgeting indicates the need for desirable changes in the structure of the entity. It helps to define weaknesses in organizations.


5. Budgeting requires that all levels of management actively participate in the establishment of objectives. It serves to enlist the assistance of the entire organization in determining appropriate courses of action.


6. Budgeting leads to the coordination of each departmental plan with all others and with the organizationís  overall objectives. It provides necessary degrees of consistency and cohesiveness.


7. Budgeting forces the management of the entity to quantify its plans in written form. This helps to eliminate uncertainties relative to basic objectives and policies at lower levels of management.


8. Budgeting instills in management the habit of careful investigation, research and study as a basis for decision-making.


9. Budgeting leads to the establishment of plans which result in the most productive use of available facilities, personnel and money.


10. Budgeting stimulates a high degree of  cost consciousness throughout the organization.


11. Budgeting reduces costs by eliminating much of the waste caused by inadequate planning and ineffective control of operations.


  Additional Benefits of Budgeting


12. Budgeting reduces the number of supervisory personnel needed through the establishment of firm policies and clear-cut lines of authority and responsibility. This frees executives from many of he routine, day-to-day responsibilities and provides more time for creative activity.


13. Budgeting pinpoints both efficiency and inefficiency. It provides standards against which actual performance is measured to determine variances which require investigation and corrective action.


14. Budgeting aids the hospital in obtaining credit from suppliers and banks. It permits the application of financial needs so that the most desirable arrangements can be made in advance for securing and repaying loans.


15. Budgeting results in more prudent planning for expansion and for procurement of plant assets.


16. Budgeting provides a continuous check on the progress being made toward the achievement of hospital objectives.


17. Budgeting permits a proper assessment of the adequacy of the hospitalís rate structure. A cost-finding procedure performed on the budget is most enlightening for this purpose.


18. Budgeting affords an opportunity for periodic self-analysis by all organizational units and all personnel in the hospital.


19. Budgeting produces a team spirit among employees. It promotes an attitude of understanding and cooperation.


20. Budgeting, when properly employed, can be a powerful device for motivating personnel to a high level of performance. A budget, however, should not be used as a whip; it should be a means of encouragement to people who want to give their best efforts to their assigned tasks.




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