The Budget, Excellent Instrument In Decision Making

The budget, excellent instrument in decision making

The budget has become an essential part for the development of an organization’s activities because it coordinates the plans in each of the areas making them productive and allowing decisions and detecting weaknesses, so it is undeniable that the entities that welcome and implement itThey have improved their production and their income becoming solid companies.

“Budgets are an excellent instrument that facilitates administration by objectives, establishing the administration goals to be achieved, pronounced in monetary terms, such as economic value added, rate of return on investment, rate of yield on capital, level of indebtedness, determinedLiquidity position. This supports an efficient evaluation during the budgetary period. Budgets also favor to direct a company through the administration by exception, in this way to fulfill the commitments contracted and channel the energy to the most notable areas that require senior management attention." 

Thinking about making a budget immediately leads us to speculate in monetary values the income and expenses that can be taken, and carry out projections to the future how much should or win and with what purpose, now let’s clarify that the budget is not only aTool used in large and powerful organizations is also used in people’s daily lives. A clear example is the planning of a vacation not only the place to be traveling to and the activities that are desired to carry out but the person are visible but the personMake a monetary budget to carry it out in the first place the income you need and compensates them with the expenses that you will consume and your goal is to know a new place where your gain will be a new experience organized under a budget.

The same goes for the entities that apply it only that these project them to long times and their end will always be generated economic profits and stability set in the objectives, in this way we can say that implementing a budget in an entity will favor its operation in vital areasas are the administrative, financial and operational, in addition that this allows people to be clear about the achievement of the objectives and evaluate the possible risks and weaknesses that are detected by reducing their impact.

Budgets are an important part for companies since they allow themAs we mentioned above in plans, evaluations and objectives that have been proposed by the entity’s management and therefore the entire business agency must respond and benefit to reach them, in this way the budget becomes a vertebra of theEntity, then, vision.

It can be concluded that:

• The budget is a vital part of the operation of a company because without them there would be no clarity where to go or what to do, and that as a result of applying it provides not only economic gains but also a market and organization stability, coordination in the different areas ofthe entity.
• The budget is necessarily linked to the plans, goals and objectives of the company that are to be achieved since this economically visualizes the projects and the profitability of the same.
• Making a budget avoids unequivocal decisions that lead to the waste of resources and therefore the company’s loss.