Budgeting vs. Forecasting Overview
While often linked together they ‘shouldn’t be’ as a budget and a forecast are not the same. They are both terrific financial management tools but they serve different roles. Budgets focus on shorter time periods like quarters or one fiscal year. Management uses a budget to measure actual income/expenses to their estimates or predictions and then analyze the differentials for immediate improvements/adjustments.
Forecasts look at longer time periods and inform long-term strategic business plans projecting what will happen at the ‘higher level’ and help to determine things like production planning or even bank loans.
For a more in depth guide click HERE to read Roger Wohlner’s full article.
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