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Financial Management
book

Financial Management

by Jack Alexander
January 2024
Intermediate to advanced content levelIntermediate to advanced
720 pages
17h 20m
English
Wiley
Content preview from Financial Management

20Budgets, Operating Plans, and Forecasts

THE BUDGETING PROCESS

In spite of its shortcomings, the budgeting process lives on in many organizations. In some cases, it is required by charter or statute. In other cases, it either suffices or has not been evaluated against new tools, and against best practices and techniques in financial management. In this section, we will review the typical budget process and tools to serve as a foundation for improved planning tools for the 21st century.

The Traditional Budgeting Process

The traditional budget process that became a cornerstone of management systems in the 21st century was described in Chapter 19. While many organizations have adopted more evolved methods of developing business projections explored later in this chapter, others continue to use the traditional budget process.

The traditional budget process follows an annual cycle. The budget for next year would be developed several months before the new year begins. It is characterized by a very detailed and financially oriented process illustrated in Figure 20.1.

An illustration of a typical traditional budget and control process from 1950 through 1980. It includes the development of detailed budget estimates from July through October 1953. Review and revisions from October through November 1953. Board Approval in December 1953. Actuals compared to budget in 1954.

FIGURE 20.1 Traditional budget and control process.

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Publisher Resources

ISBN: 9781394228362Purchase Link