What Is A Characteristic Of A Successful Budget?
What are the most important characteristics of successful budgeting to learn for the CMA exam? To be successful, the budget must be well planned, flexible, realistic and clear.
The budget must meet the goals of the Business
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Basically, the budget should start with Short-term and long-term plans of the business and target. Budgets shouldn’t just replicate a business’s previous year’s results with minor changes. It must include valuable inputs from planning for the budget to be a powerful guiding tool. Read: What are the characteristics of a successful budget?
Budget should be a motivating tool
Budget should mobilize and inspire everyone in the business to work towards achieving its goals. Furthermore, the budget should encourage people to work together to improve the organization. A budget should not be seen as a rigid plan or as a tool for top management to use to assess accountability. .
The budget must have the support of the Management Board
Undeniable budget with leadership support at all levels of the organization. The support of both top and bottom management is crucial to garnering employee support within the organization. Therefore, to be successful, it is important that the budget has the support of management at all levels of the organization.
Budgets should convey a sense of ownership
Read more: What does the X in the text mean To be successful, the budget must convey a sense of ownership for people in the business who are tasked with implementing the budget. At any stage in the implementation process, the budget must feel restrictive or too arbitrary for those responsible for implementing it. Don’t impose a budget on them. Instead, those responsible for implementing it, must have the necessary input for the development of the budget.
Budget must be flexible
The key factor in the success of a budget is whether it flexible or not. Most successful budgets are flexible. Flexible budgets allow businesses to carry out plans that are strategically important to the business. However, a rigid budget becomes an excuse not to execute strategically important plans. Rigid budgets don’t allow this, thus hurting the business in the long run.
The budget should be an accurate representation
To be useful, the budget must exact representation what is expected to happen. An incorrect budget will not get the support of managers and employees directly affected by it. but lower revenues and higher expenditures. This results in managers being unfairly rewarded whenever they exceed revenue goals or cut costs.
Budgets should be coordinated
Right budget combination to operate smoothly in the various business units of an enterprise. For example, the sales manager will work to increase the sales of the business. However, the credit manager will be extremely interested in limiting bad debt write-offs. Exam content and tips by email, please register using the form below. I wouldn’t want you to miss these golden nuggets. Until next time, Share love! Read more: What does Wtd mean in texting
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