The Financial Times Essential Guide to Budgeting and Forecasting

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How should the budget be built?

There are different approaches to building budgets. The three most recognised are known as incremental budgeting, zero based budgeting and activity based budgeting.

What does each approach mean? Which approach is best? How do you go about collecting information and building budgets? How can you get better at forecasting costs and income? How can you work with your finance department to make things better?

Introduction

Before building budgets, it is important to have clear statements about the company’s policy, objectives and strategies. We need to know where we are going and what is important to the organisation. Some of the key information will usually be described in the organisation’s statements of values, ...