Top-down: The management determines the scope and distribution of the budget and the department/project managers then plan the measures that they can implement with it.What is the best approach to budget planning? There are three procedures that have proven particularly effective: Initially, a simple table may be sufficient for an overview, but in the long term it makes sense to use a database with more functions for your budgeting. However, the further into the future the planning horizon is, the more difficult and uncertain it is to make an accurate forecast. This helps you to make long-term business decisions that will drive your company forward and ensure its success, such as opening new locations. Strategic budget planning for the next two to five years is also quite common.
You use the data from the current and/or previous financial year to derive forecasts for future developments and distribute the budget. In principle, budget planning is carried out for the future, usually for the following financial year. Operational budget planning is part of short-term financial planning, in which you estimate your future income, expenses and costs. Budget planning goes hand in hand with strategic corporate planning Budget planning can have a motivating effect on your employees, as they can keep an eye on the targets, measure success and be rewarded for it.
With a binding budget plan, you can also ensure that your managers define clear goals and take efficient measures to achieve them. © MclittleStock / Adobe Stockįorward-looking budget planning helps you to allocate money and resources sensibly to departments and projects and thus achieve your business and project goals. Budget planning is essential for your company.