Financial budget
Shows not only all sources of cash flow, but also where the company plans to use these funds. It includes investment and cash budgets:
investment shows planned expenses for further scaling and modernization of production, for example, expenses for purchasing new equipment, building a workshop, opening a branch in another city, etc.
The cash budget represents the planned receipts and expenditures of funds for the reporting period.
These financial documents can also be fixed and flexible. The first type of budget is considered a classic option and does not provide for the possibility of changing financial indicators, unlike the flexible one, for which adjustment is the norm.
In the context of an unstable botim database economic situation, many companies have begun to practice an intermediate – sliding – budget option. It is updated quarterly, with a recalculation of planned values. This allows for a prompt response to sudden economic cataclysms.
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Designing a Business Budget
The development of a project for the financial structure of an organization, including a budgeting system, depends on the size of the company and its field of activity.
From a hierarchical point of view, the financial structure of a company consists of several responsibility centers (RC) and is a determining element in the distribution of powers, responsibilities and motivations depending on the results of activities. Each such point has its own budget, as well as indicators of its financial and economic activity.
Before creating a project, it is necessary to analyze the financial and economic documentation, study how various departments interact with each other, and prepare personnel for the implementation of the budgeting system.
Only after all these activities have been worked out does the formation of the model begin. Depending on the company's area of activity and types of operations, financial responsibility centers (FRC) are created, for the coordination of whose work are responsible persons whose area of responsibilities also includes control of income and expenditure of funds, distribution of the corresponding flows.
The company's budget takes into account not only financial indicators but also natural ones, therefore, in addition to the CFO, there is also simply the CO, which is the place where decisions are made. Control over the monetary parameters of the organization does not fall into the category of the main functions of this point.
Designing a Business Budget