August 27, 2011
A budget is an instrument used to help managers ensure that the resources used effectively and proficiently toward the goals of an organization. A budget projection can be made on a yearly base depending on previous year or existing one. They can further be broken down quarterly or monthly depending on it use. Generating a budget is complex undertaking, and for a budget to be effective the organization ought to follow it strictly. However, no matter how closely a business follows their guidelines there will always be some form of variances. The organization should expect a few variances and be able to work these discrepancies in any budget constraints.
Managing the Budget within the Forecast:
According to Finkler, Kovner and Jones, (2007), organizations exercise control over operations through the use of a management control system. As a result the institute has to have someone in charge of finances and knows how to manage money. There many ways to be proficient in achieving these goals. First approach is to forecast an important budget when created generally within a year. The ability to predict an operations growth or decline allows time to respond rather than acting as situation arises. Performing this method can make the financial officer to establish effective policies. Managers need policies that will limit their debt, oversee balance, and minimize reserves. The next goal is that budget ought to recuperate many of its operating expense. As in many occasion, organizations have mandatory expenditures however, when expenditures are not relevant in the function of the organization, these cost can be saved. In the health care industry it is important to minimize any additional cost by placing expenses on vital services in the facility. The third goal in budgeting should reveal the priority in expenditure. Identifying and prioritizing the services needed to...