Budgeting and forecasting are crucial to overall business performance, as you set goals for sales and expenditure, holding you accountable to those targets as the year progresses. This process is followed by the most financially successful organisations.
Although budgeting and forecasting normally go hand in hand, there is a distinction between the two and they can be used separately.
The difference between budgeting and forecasting:
With a budget, we refer to the company’s projected revenue and expenditure over a determined period of time. The budget plays an important role within the company and can be used as an internal tool by senior management.
A financial forecast refers to the process, projections, or expectations of how a company will perform in the future. It takes into account revenue objectives and targets. Although budgeting and forecasting can be used separately, using them together gives you a deeper understanding of the company’s finances for financial planning and analysis. The forecast may be updated throughout the year, but the budget should remain the same.
Modern business forecasting emerged in reaction to the economic devastation of the Great Depression of the 1930s. New forms of statistics and predictive analysis have been introduced that could help organisations better predict the future. Consulting firms were then started to help businesses use these new predictive methods.
Advantages of budgeting and forecasting:
- Identification and review of industry changes and their effects in real-time
- Identify areas of risk early
- Accurate cash-flow predictions
- Manage your sales pipeline and track performance
- Easier employee performance tracking (against sales pipelines)
- Make more confident strategic decisions
- A Bigger focus on market development while setting long-term budgets
Increased returns on corporate investment based on more strategic financial choices
- Show potential investors
The effectiveness of your financial planning will depend on your finance department ‘s experience with modern methods for budgeting and forecasting. Take a budgeting and forecasting training course to make your budgets more efficient and learn the importance of rolling forecasts and testing processes for results.
What will set you apart
When the traditional annual budget is replaced by a combination of a more credible budgeting process and a running forecast, a responsive and highly efficient management method will emerge. By taking one of these budgeting and forecasting training courses you will learn how to make your budgeting process responsive to plans inspired by changes in strategy and the market. Most importantly, you will play a pivotal role as a catalyst for change within your organisation.
Are budgeting and forecasting courses for you?
Budgeting and forecasting is an essential professional business skill that needs constant development, whether you are in the finance industry or are from a non-financial background. Thorough understanding of budgeting and forecasting regulates the effective planning and decision-making activities expected of managers and is essential to the business strategy.
These courses are highly recommended to anyone who is part of the leadership team or who works with budgets and financial documents.