What Is Budgeting?
A budget is a detailed financial outline of what the business thinks will happen over a period of time (often a year) financially. The budget will include details about the company’s revenues, expenses, cash flow and financial position. This information should be available from your company’s financial reports. To learn more about financial reporting and to download free customizable financial statements, see our guide here.
Depending on the size of the company, there may be a budgeting process—often done later in the year—with input from the company’s various functional departments and profit centers, which should be managed by your head of finance.
In smaller companies, the budget might be done by the owner alone or with the help of a few key employees. The process and timeframe to complete the process are likely shorter in these cases.
Most budgets are static and set for the company’s fiscal year. However, some organizations use a continuous budget, adjusted during the year based on changing business conditions. While this can add accuracy, it also requires closer attention and may not necessarily yield a better outcome.