Advantages of Budgeting
A budgetary system gives an organization several advantages.
1. It forces managers to plan.
2. It provides information that can be used to improve decision making.
3. It provides a standard for performance evaluation.
4. It improves communication and coordination.
Budgeting forces management to plan for the future. It encourages managers to develop an overall direction for the organization, foresee problems, and develop future policies.
Budgets improve decision making. For example, if Dr. Jones had known the expected revenues and the costs of supplies, lab fees, utilities, salaries, and so on, he might have lowered the rate of salary increases, avoided borrowing money from the corporation, and limited the purchase of nonessential equipment. These better decisions, in turn, might have prevented the problems that arose and resulted in a better financial status for both the business and Dr. Jones.
Advantages of Budgeting
A budgetary system gives an organization several advantages.
1. It forces managers to plan.
2. It provides information that can be used to improve decision making.
3. It provides a standard for performance evaluation.
4. It improves communication and coordination.
Budgeting forces management to plan for the future. It encourages managers to develop an overall direction for the organization, foresee problems, and develop future policies.
Budgets improve decision making. For example, if Dr. Jones had known the expected revenues and the costs of supplies, lab fees, utilities, salaries, and so on, he might have lowered the rate of salary increases, avoided borrowing money from the corporation, and limited the purchase of nonessential equipment. These better decisions, in turn, might have prevented the problems that arose and resulted in a better financial status for both the business and Dr. Jones.
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