Budgeting & Pricing

Planning Budgeting and Control

Planning Budgeting and Control

Introduction

In terms of financial management, budgeting practices enable organizations to express their goals and visions in terms of money. Several budget types are being utilized across organizations worldwide depending not only on the strengths and weaknesses of that organization but also on the external environmental factors. Often organizations make use of last year budgeting plans and add incremental changes to it to avoid initiating the entire process from scratch.

In each organization, the requirements of funds and additional activities vary from time to time and therefore, the need for individual project budgeting is also present. The various control processes employed in my organization for budgeting and for financial management in general have been highlighted below. These are based on the knowledge that the company aims to improve its budget based on the past year's information and budgeting methodologies. Discussion

Planning Elements

It is worth mentioning here that in practical, companies accommodate a host of processes that run parallel to each other hence, blurring the lines between various processes and phases. The key planning phases involved in budgeting have been mentioned below. However, there is still a need to introduce a certain element of control in these respective phases, and the same has been highlighted in each case to give a clearer perspective.

Budget Preparation Time

This is perhaps the fundamental question that governs the planning process and also its success. In general, the company attempts to initiate the budgeting process once it has definite figures available from the first three quarters of last year. A committee is set up that takes decisions relating to the timing and also identifies the leaders and the process managers. Balancing Decisions

There are a host of challenges and decisions that must be catered to when developing a budget. It is the task of the budget committee to define the basic goals and objectives to avoid confusions at later stages. One such decision pertains to balancing. While many organizations aim to achieve a “balanced budget”, the company in focus has depleted reserves. The current aim of the organization therefore, is to achieve a budgeting surplus so as to cater for the deficiency in reserves. Also, there are fluctuations pertaining to individual projects that are run at various points and the balancing decisions related to these are based on the specific project owners. The overall aim however, is to maintain a combined company budgeting surplus despite individual project budget deficits or surpluses. All these decisions are further regulated by company policies, restriction and regulations (Anonymous, 2008, Pp 348).Expense Decisions:

Planning processes involved in this phase are most prone to criticism and conflicts from the internal stakeholders of the organization. In this phase, the company utilizes the last year's budget as an initial reference document, adding to the same the necessary expenditures required for development activities. The budget also caters to any expansion goals and objectives. However, given the limited reserves of the company, the expenditures pertaining to newer developments are kept ...