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What is a forecast and how does it differ from a budget?

What is the difference between a budget and a forecast? What is the function of a forecast? What tools and techniques are available? How frequently should forecasts be produced and how can we make them more accurate and more useful? These questions are addressed in this chapter.

What is the difference between a budget and a forecast?

Budgets describe what the future is most likely to look like (based upon our plans); forecasts describe what the budget is most likely to look like.

Forecasts as updates to the annual budget

Managers often confuse budgets and forecasts. When the budget is produced it may require some forecasting to derive some of the figures. ‘The forecast’ is an updated ...

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