Budget and Its Importance

There are 3 main features that come to the fore in successful businesses. These are “Planning”, “Organization” and “Internal Audit”. While the correct planning of the activities gains value thanks to a well-functioning Organization, a solid Internal Audit will contribute to the continuity of success.

Budget, which is one of the tools of planning, is indispensable for any company. In order for the budgets to reach their purpose, it is important that the coordination and budgetary control within the company are carried out effectively.

One of the most important factors for companies to ensure their sustainability is having a financial discipline. For financial sustainability, besides having an effective budget in line with the strategic goals of the company, it is also very critical to follow this budget effectively.

When discussing the financial affairs of a company, it is very important to mention the budget. The budget is the future planning table of the company, which includes the reciprocal numerical estimates of income and expenditure, which we foresee to occur in the future or in a certain period of time.

The budgeting process lets an organization plan and prepare its budgets for a set period. It involves reviewing past budgets, identifying and forecasting revenue for the coming period, and assigning amounts to spend on a company’s various costs.

When done well, the process involves input from senior management, finance team, and budget managers across the organization.

Think of the budget as putting the business plan into action. Priorities and goals for the company in the coming year are set, and the budget allocates financial resources to achieving these.

A properly functioning Budgeting process will provide the following benefits to the firm;

???????Facilitates the decision-making process of senior management

???????Provides effective control of activities

???????Helps all units achieve unity of purpose in a common goal

???????Contributes to the Internal Audit process

???????Requires forward-looking and multi-dimensional thinking.

???????It allows the business to get away from the daily operations and look at the business from a broad perspective.

There are different budgeting techniques according to the structure of the companies. However, a successful Budget work will only occur when all units are included in the process. It is important that the detailed Budgets, which will be prepared separately by all units, are questioned and approved by a Budget Committee to be established within the company. In this way, against the inquiries and objections of the units, the Budget Committee; They will need to provide scientific and data-based explanations. After the approved unit Budgets are consolidated and consolidated, the Budget should be followed up and controlled. As time progresses, forecasts and actuals must be compared and reported. It will be possible with a well-functioning accounting system to obtain the actual data in an accurate and close to the budget format. Thanks to the Integrated programs used in companies, this process is getting easier.