In this article, we will get to learn about the 3 steps under a Budget Module which helps an organisation to map out its short and long-term financial goals.

Planning – a framework for a company’s financial goals, often for the following three to five years.

Budgeting – details how the plan will be implemented month to month, including revenue, expenses, possible cash flow, and debt reduction. A business will customarily choose a fiscal year and develop an annual budget. Depending on actual income levels, the budget may need to be adjusted. It may also compare real financial statements to the budget to see how near it is to be met or exceeded. 

Forecasting – takes it and then predicts more than how much money a business can expect to bring in over the following few months or years based on past data and current market conditions. Forecasts are typically modified when more data becomes available.

Evolution of these Processes   

Basic accounting procedures have existed since the 1400s when Venetian investors used double-entry bookkeeping, income statements and balance sheets to keep track of their Asian trade missions. The old French word ‘bougette’ which means “little purse,” is where the term “budget” originates. When the chancellor delivered the yearly financial report in the middle of the 1700s’ the British government first used the phrase “open the budget’.

Why these Processes are Important 

Creating and implementing robust planning, budgeting and forecasting processes helps the institute establish more accurate financial reports and analytics – potentially leading to more accurate forecasting and ultimately revenue growth. Its importance is even more relevant in today’s business environment. Where disruptive competitors are encroaching on even the most traditional industries.

In particular business can:-

• Rapidly, updates plans and forecasts in response to new threats and opportunities, identify risk areas early and fix problems before they become serious.
• Identify and analyze the impact of changes as they occur strengthening coordination between business and financial plans.
• Better cash flow planning and forecasting.
• Improve communication and collaboration between plan contributors.
• Consistently provide timely and reliable plans and forecasts and contingency plans for a variety of possible events.
• Analyze deviations from the plan and initiate corrective actions immediately  

How Advanced software solutions can help 

With the help of eGenius organizations can easily:-

• Measure and monitor performance with interactive self-service dashboards and visualizations
• Root Cause Investigations with High-Fidelity Analysis of Dimensional Data 
• Evaluate trends and automatically make predictions from internal or external data  
• Rapidly model what-if scenarios to produce timely and reliable plans and forecast