Budget, Less Stress

A budget is a forward looking tool to estimate cash in-flows, outflows, and balances of cash as it stands at various points in time.  One of the greatest benefits of a budget is to detect possible future cash stringencies and make arrangements well ahead of a crisis.  The sources of crises can be from both positive and negative factors.  A positive crisis may be growth where a company makes sales in greater proportion than their cash-on-hand can support.  A negative crisis may be declining or no revenue to satisfy operating expenses.  In either case pre-planning benefits the company by causing less stress on everyone.

The quality of a budget says a lot about the management of an organization and their ability to perform well in a changing market.  Budgeting is essential to the welfare of an enterprise because it is a tool to help a workforce, front-line employees and management, understand if they are achieving financial success.  If yes -then good.  If no then something needs to change.  In general, a profitable business is an asset to society because it puts together raw materials, labor and management and converts them into something of greater value to society. 

Budgeting is a good way to avoid losses by planning in advance.