Budgetary control is the process of preparing budgets for the future period, comparing the standards set by budget with the actual performance, finding out the reasons for the differences in performance, and taking corrective actions.
Nowadays, the market as overall is going through an unstable period and it is particularly important to have budget controls and planning in place.
If your goal is to maximize budget control, you have to invest in the activities of monitoring budgets and managing budgets. Monitoring is typically defined as the process of checking the accuracy of incomes, expenditures, and calculating variances based o9n trends. Managing budgets is taking the necessary action, based on the monitoring results, to ensure the budget remains within control.
Specifically, in the era of COVID 19 and global recession, companies must provide extra thought to the proactive planning of budgets. This does not mean layoffs but a smart allocation of resources upfront. From a planning perspective, a budget is a glue that makes the different parts of the organization fit together. It harmonizes the enterprise’s strategy with its organizational structure, its management and personnel, and the tasks that need to be done to implement the strategy. When well done, it translates the strategic plans of the organization and its implementation programs.
In order to define strategy, we have to start by having a clear list of the company’s objectives and priorities. Those should rely on economic forecasts and past results, taking into consideration the changing working environment. Only after establishing a clear goals map and analyzing your environment, will you be able to define how to maximize the resources available.
