Budgeting, Planning & Forecasting Software

What is budgeting?

Budgeting is the process of different departments coming together to estimate revenue and expenses for a predetermined period of time. The goal is to establish and unify commonly understood targets. The budgeting process involves evaluating resources, prioritizing objectives and analyzing the difference between objectives and outcomes.

The purpose of budgeting is:

• To Plan: the operational budget begins with establishing and combining the objectives and identifying resources in order to create a plan for subsequent activities
• To Communicate: the budget should be communicated throughout an organization and be reflective the objectives of each department
• To Motivate: budgeting spreads knowledge of business goals and guides managers by providing the financial parameters to deliver them
• To Coordinate: budgeting coordinates and unifies all departments and business units to the higher level goals

The master budget is composed of three distinct components:

1. Operational budgets: these define the positive and negative components of income and the related financial implications that result in the development of action plans
2. Budget of investments: First, this allows budgeters to quantify the effort needed to adapt the item to company structure. Secondly, it defines the need of financial resources that contribute to the final structure of the State Assets quote
3. Summary reports: These include, cash budget, cash flow forecast, forecast and loss account balance sheet forecast. In addition, they require budgeters to combine the estimated revenue and cost, entry and exit, a verification summary of the resulting income, financial and capital action plans and investment.

What is forecasting in business?

Forecasting, often found alongside budgeting and planning processes, uses past and present data, trend analysis, and executive insight in order to predict the future state of any given metric.

What are the three types of forecasting?

1. Qualitative: market research or the delphi method (collection of expert opinions), panel census
2. Time series analysis and projection: historical data, trend projections Box Jenkins, X-11
3. Causal models: regression model, econometric model, input-output model, life cycle analysis

Like the weather, financial forecasting isn’t an exact science and indicating uncertainty in forecasts is common practice. In order to mitigate errors, access to accurate historical and real-time data greatly improves the accuracy of forecasts. In addition, the ability to combine rolling forecasts, long-range forecasts, scenario playing and stress test events helps bolster forecast findings and makes forecasts more agile and responsive to business, economic or KPI change.

What is strategic planning?

Strategic planning sets out what your organization needs to pursue over the next three to five years to achieve its mission. The strategic plan itself is an analytic and comprehensive guideline that executive management creates to align the organization around its core mission. So that everyone works toward common goals, the strategic plan lays out high-level objectives, the actions needed to achieve those objectives, and the desired results. To create a strategic plan, your company must assess its market position, strengths, weaknesses, and areas of desired growth.

What is operational planning?

An operational plan breaks down how divisions, departments, or cost centers intend to achieve those plans. The operational plan is much more tangible, granular, and action-oriented than the strategic plan. It sets out the goals on a lower level and then lays out the blueprint for achieving those goals. Then it defines how activities and resources — human, physical, and financial — will support the broader strategic objectives. Some examples of operational plans could include sales planning, capacity planning, and inventory planning.

Operational planning best practices: Like strategic planning, there's no single way to create an operational plan. Generally speaking, operational plans contain specific strategies, objectives, activities, timelines, and metrics.

What is financial planning and analysis?

At its most basic, financial planning and analysis is the process of creating a company’s long term financial strategy based on its strategic goals and through an analysis of assets, liabilities, expenses and income. Often, it involves forecasting financial realities and analyzing long term objectives from a financial point of view specifically in order to sure that those are objectives are viable and within the scope of the financial reality.

What are balance sheet forecasts?

Balance sheet forecasts are also called the balance sheet projection. It is a forecast of the predicted financial condition of a business at a certain point in the future, based on the balance sheet. Within it, forecasts for liquidity, cash flows, solvency, equity and working capital can be obtained and assessed. The balance sheet forecast is especially valuable because of its ability to forecast working capital. By understanding how working capital is going to look in the future, executives can take action to improve cash flow. The balance sheet often serves as a basis for subsequent forecasts and is also used by prospective investors who are deciding whether to invest or not as a way to mitigate their risk. 

What is ICT Budgeting?

ICT (Information Communications and Technology) budgeting is the operating budget used by companies that fall under the Information and Communications Technology industry. It includes allocated amounts  for communication devices, including radio, television, mobile phones, computers, software, satellite systems, video conferencing and distance learning.