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Forecast management and comparison with budgets

Forecast management

Developed budgets is essential for modeling innovative action plans, to anticipate, given the time to implement, actions and trade-offs between development projects.

A budget helps to validate selected options and measure the actual performance of the organization, and to set goals using incentive systems to company stakeholders. Comparing achievements to forecasts is for taking corrective actions (control loops or feedback) and to question the underlying assumptions. Budgets are the financial translation of coherent action plans with the objectives of the organization.

The financial year can reveal the reasoning that led to the choice of action plans and budgets to synthesize the different responsibility centers. A budget is not, in theory, the continuation of past income statements. In fact, the coherence between the financial records of short-term and long-term financial projections is always problematic.

The development of budget documents is performed according to procedures to allow more or less independent entities to coordinate and harmonize their policies. The purpose of the budget process is the integration of different entities Refer to useful basics one organization supposedly pursuing unified and clearly determined objectives. The main difficulty in harmonizing action plans is accountability and alignment of responsibility centers with the general objectives of the organization. 
 
Ultimately the development of a consolidated budget means; to make the trade-offs and choices corresponding to the strategy that the organization is effectively implemented. Consistency between the whole (the company) and parties (responsibility center) is always highly problematic quest.
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