https://www.forbes.com/sites/forbesagencycouncil/2017/02/03/forecasting-and-budgeting-can-improve-your-companys-fiscal-performance/?sh=7646fe164fc2

If you set a target you need a reference and the path to it.

The forecast tools allow you to set an indicative direction and expected results that you should confront then with the actual ones.

The budgeting path confronts also with means and expected achievements but, while during the forecasting exercise you may allow more flexibility to your planning, when engaged in the budgeting task you must always confront more strictly with present and future actual means and expected results particularly for the financial part of your planning.

Para manajer memanfaatkan anggaran sebagai salah satu alat untuk menjalankan fungsi

manajemen. Untuk menjalankan fungsi-fungsi tersebut manajemen dapat menggunakan

anggaran karena anggaran dapat dijadikan sebagai sarana yang:

1. Menjadi alat untuk mengomunikasikan rencana-rencana manajemen di seluruh jenjang

organisasi.

2. Mendorong para manajer berpikir dan merencanakan tentang masa depan.

3. Menyediakan suatu dasar untuk mengalokasikan sumber daya kepada bagian-bagian

organisasi yang memungkinkan sumber daya tersebut digunakan dengan cara yang paling

efektif.

4. Mendeteksi kemungkinan terhentinya aktivitas sebelum hal itu terjadi.

5. Mengoordinasikan aktivitas seluruh bagian organisasi dengan mengintegrasikan rencana-

rencana dari berbagai bagian tersebut.

6. Menetapkan sasaran dan tujuan yang dapat berfungsi sebagai patokan untuk mengevaluasi

kinerja yang akan dicapai dalam pelaksanaan rencana-rencana tersebut. Reference: L. M. Samryn, (2015) Akuntansi Manajemen:

Informasi Biaya untuk Mengendalikan Aktivitas Operasi dan INVESTASI, Ediri Revisi, Prenada Media, Jakarta. (Link: https://shopee.co.id/AKUNTANSI-MANAJEMEN-L.M.-Samryn-S.E.-Ak.-M.M.-i.121988668.2725780480

@Lavina Kiru Hokogo

Budgeting and forecasting are two vital tools that organizations use for financial planning and decision-making. They work together to provide a roadmap for the future and ensure the wise allocation of resources. Here's a breakdown of their individual purposes:

Budgeting sets a financial plan for a specific period, typically a year. It outlines expected revenue and expenses, essentially acting as a roadmap for how the company will achieve its financial goals. Budgets help organizations:

Allocate resources: By laying out expected income and expenses, budgets guide how resources should be distributed across different departments and projects.

Set financial goals: Budgets translate broad objectives into specific financial targets, making them more achievable.

Monitor progress: Budgets provide a benchmark to track actual performance against planned targets. This allows for adjustments to be made if necessary.

Forecasting involves predicting future financial performance. It uses historical data, current market trends, and industry benchmarks to create projections for revenue, expenses, and other financial metrics. Forecasting helps organizations:

Proactive decision-making: By anticipating future financial situations, organizations can make informed choices about investments, staffing, and other strategic initiatives.

Risk management: Forecasts can help identify potential financial risks and opportunities. This allows for the creation of contingency plans to address challenges and capitalize on favorable situations.

Improved budgeting: Accurate forecasts provide a solid foundation for creating realistic and achievable budgets.

In essence, budgeting and forecasting work hand-in-hand. Budgets provide a framework for resource allocation based on forecasts of future performance, while forecasts are continuously refined based on actual financial results. This cyclical process is essential for any organization that wants to achieve its financial goals and navigate the ever-changing business landscape.

1. Serves as a planning tool

- A budget forces managers to think about the future.

- Keeps managers in continuous planning mode.

2. Translates strategy into financials

- While strategies often include rather soft promises with no concrete time frame, a budget substantiates the strategic plan.

- Serves as fine-tuning of the strategy.

3. Promotes coordination

- The budget assigns responsibilities among subunits and the total supply chain.

- Inconsistencies within the budget can be identified and resolved.

4. Promotes communication

- Having a formal document such as a budget is an effective way to communicate a plan.

5. Provides a basis for performance evaluation

- A budget can serve as a benchmark against actual performance.

- To motivate managers, a bonus can be paid when a budget is met or exceeded.

Budgeting and forecasting play crucial roles in managerial accounting within an organization. Here some area that we can mention:

Planning and Goal Setting: Budgeting and forecasting help in setting financial goals and targets for the organization. By analyzing past data and market trends, managers can predict future financial outcomes and plan accordingly. This process enables the organization to allocate resources efficiently to achieve its objectives.

Resource Allocation: More specifically budgeting allows managers to allocate resources such as capital, labor, and materials effectively. By having a clear budget in place, decision-makers can prioritize investments and expenditures based on the organization's strategic priorities and financial capabilities.

Performance Evaluation: Using budject allows us to benchmarks for evaluating the performance of departments, projects, and individuals within the organization. By comparing actual financial results with the budget, managers can identify variances and take corrective actions as needed. This process helps in improving accountability and efficiency across the organization.

Decision Making: Forecasts, on the other side, provide valuable insights into future financial scenarios, helping managers make informed decisions. By analyzing various what-if scenarios and their potential impacts on the budget, managers can assess risks and identify opportunities for growth. This enables them to make strategic decisions that align with the organization's long-term objectives.

Communication and Coordination: Budgeting and forecasting althogether facilitate communication and coordination among different departments and stakeholders within the organization. By involving key stakeholders in the budgeting process, managers can ensure alignment with organizational goals and foster collaboration across teams.

Risk Management: Forecasts help in identifying potential risks and uncertainties that may impact the organization's financial performance. By incorporating risk factors into the budgeting process, managers can develop contingency plans and mitigate potential threats to the organization's financial health.

To sum up, budgeting and forecasting could (and should) be used as essential tools in managerial accounting as they provide a structured framework for the abovementioned activities within an organization.

forecasting and budgeting in organization will help the organization in future financial planning and budgeting will help to control the different costs and run the organization smoothly

Budgeting is a very strong management tool. It is your voyage plan on a ship. Your ship wants to go from Point A to Point B. Just like you need a plan to sail your ship in the intended direction that`s what the budget does for your company. You have to plan everything before the financial year starts. That includes your proforma income statement, balance sheet, income statement, shareholders` equity and cash flow. At required intervals of the actual year of performance, you compare your budget figures (singled out monthly or on cumulative basis on income statement) with your actuals. This gives you a heads up whether you are still on the correct route or you are sheering away from it. Then you will have the opportunity to take the measures to put your company in the correct route if you have steered away. Having said that, managers know what is going on the company on a daily basis. Normally company data is updated-not in every detail of course, momentarily, in a computerized environment, probably the correction measure would be taken already before the end of the month results. But still managers will want to see the total picture at the end of the month (or at the required intervals) with all income statement and cash flow effects.

Budgeting and forecasting are very pivotal finanacial plan for effective and efficient management of the affairs of the organisation to achieve both short term and long term goals and objectives of the organisation. Bugdet and forecasting are esssential in an organisation for the following reslasons:

* It enhance organisation to estimate its expenditure and estimate revenue for the reporting period

* It's helps to achieve both short term and long term objectives ans goals of the organisation

* It enhances effective and efficient utilisation of productive resources

* It's helps the measure the financial performance of different reporting period

* It help to direction of productive resources into it's more usuable form