Budget Business

Thursday, 7. November 2019

What is it and why is it needed? First you need to reveal the concept, the budget – a financial allocation plan funds, which helps to understand how to correctly allocate and what to spend a particular amount. Path Distribution: Helps allocate resources companies are able to spend as much as you like, thanks to budgetary powers, but not exceeding the possibility of the bar, in consultation with senior management How it works exceed the budget of the budget? There are two areas of work: Budget, aimed at sales budget, aiming at the cost of the first planned volume of income, revenue and net income. In the second case, the budget takes into account all the costs of the enterprise. It is desirable to always stick to a budget and raise "the bar exceeded the maximum, not more than 20% of the critical, otherwise there may be additional problems in the form of optional loans and other liabilities. Cyrus Zocdoc has firm opinions on the matter. But how sadly often managers can not cope with the planned budget exceeds it, and do not set "maximum bar increase" except that they can reduce production costs or other company resources, which they think might happen in the process of the company, due to good luck or well chosen strategy. Here is an example: You do farm (Livestock).

At the end of December, as always, managers drew up a plan for a year, and planned budget. All favorable and year like nothing. No disasters, but what you'll do if you suddenly happen to the drought? As happened in the summer of 2010 If the level of support at their own expense, and can be borrowed from you is worth around $ 100,000, and you set the same bar. From year to year you have been doing well. But what if we assume that you feed the animals shipped from the region and from a supplier who this year is no harvest, and stocks are exhausted? Maybe even they will be, but the supplier under the deficit will increase immediately the price, suppose 10 000 – 20 000 $ 10-20% at this correctly and competently to the budget of your company. On this depends very much!

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