As follows from the above, estimates are made not only for the entire organization as a whole, but also for each of its departments, startups, and products. Financial plans are divided into two main categories:
Operating budgets
When compiling them, it is possible to use both natural indicators and financial ones. For example, the amount of goods produced for each business process.
Most often, this type of budget takes into account the structure and volume of sales; production parameters; costs allocated to the wage fund; investment policy; costs of the administrative and management apparatus.
Such plans contain several self employed data package income and expense items and also take into account the receipt of money from external sources.
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Financial budgets
The final document that consolidates the information contained in the operating budgets. It is designed to display the financial key performance indicators of the entire firm.
The financial budgeting of an enterprise includes:
Income and expense estimate. It can be used to determine expected revenue, expenses and forecast profit. All income and expenses are distributed by product classes, individual technological processes. At the same time, companies strive to avoid both a simplified, too general approach and excessive detail. This type helps to objectively determine the level of profitability and acts as a tool for effective control.
Financial plan by accrual method. The meaning of the document is that the indicators are included in the relevant articles as they arise, regardless of the actual receipt of money. This type of budget is designed to solve local problems and should not be limited to its compilation, since this form does not provide objective information on the actual movement of financial flows and may not reflect possible cash gaps.
Cash flow budget. This type of plan illustrates all sources of income and the structure of the company's mandatory payments. When drawing up, income and expense schedules are used in accordance with the provisions of approved agreements with partners, providers, consumers, tax authorities, employees, investors.
Financial budgets
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With the help of such a budget, it is convenient to determine the periods in which there will be a shortage of available funds for timely payments on obligations. Therefore, it becomes possible to calculate the size of the necessary reserve of financial resources, as well as to determine the sources of its formation.
Enterprise budgeting management contributes to more rational use of finances and obtaining positive economic results.