By Melba Bernad | May 30, 2012
Budgets are incredibly important for small and medium-sized businesses; they are supposed to help keep spending under control and ensure financial health. Allocating budgets for departments or business activities requires thorough planning otherwise one small miscalculation could spell financial disaster.?
Annual budgeting and monthly budget reviews should be a part of every business? management process.
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An IBM whitepaper on ?Best-Practice Budgeting? notes that budgeting is not popular in many organizations because managers see the process as a time-consuming and recurring setup for executive blame and recrimination over negative outcomes that they could neither predict nor control.
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However, despite challenges and issues, virtually no business forsakes the budgeting cycle. There is too much risk in the end result to run a business without a financial plan.
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John A. Tracy, a professor of accounting and author of several finance books, says that budgeting forces managers to do better forecasting. It also motivates managers and employees by providing useful yardsticks for evaluating performance. Budgeting can also assist in the communication between different levels of management.
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Budget Types
There are several types of budgets, but the more common types are the operating budget, capital expenditures budget, and financial budget.
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The operating budget is the budget for income statement elements such as revenues and expenses.?
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The capital expenditure budget is the budget for expected investments in capital assets and long-term projects.
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Meanwhile, the financial budget deals with the expected assets, liabilities, and stockholders? equity.
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Determining how much money should go to each budget depends on the business? priorities and goals. To best serve the company?s long term goals and objectives, develop a budget that is in sync with the company?s corporate strategy.
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Budgeting Methods
But how do you come up with a budget for each? There are three key methods to developing a budget: top down, bottom up, and zero-based budgeting.
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With the top down approach, estimates for expenses originate at the top of the organization and imposed on the lower layers of the organization.
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According to finance experts, this method can be unrealistic because upper management may not have enough knowledge about the individual departments to come up with a budget.
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The more realistic method is the bottom up approach. Department managers create budgets for their department and then send them up the chain of command, so that all of the individual proposals come together to form the entire business budget.
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While the bottom up method can be more accurate, department or project managers may end up asking for more funding than will actually be needed.
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Under the zero-based budgeting method, each manager creates a budget from scratch? not based on historical data. This approach is complex and time-consuming since individuals and managers in each department must create a detailed budget specific to the next budgeting period.
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Budgets are only useful tools as long as they are followed and used to make necessary adjustments. A good budget should be flexible such that it can incorporate changes in the future. However, if a budget is created and then ignored, it can't help a business manage finances.
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While creating your budget you need to decide if you will be creating a monthly budget or even a yearly budget. These days, the budget may be out-of-date as soon as it?s approved.
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Finally, your current financial situation will strongly dictate how you will allocate funds. Limited cash inflow means that you need to slash the budgets proposed. Massive cash flow, on the other hand, means a lot of money at your disposal.mlk memorial mlk memorial heather locklear hospitalized joplin tornado extreme makeover home edition constitution day constitution day
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According to the Mortgage Bankers Association?s Weekly Applications Survey, average mortgage rates fell to yet another new survey low last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances fell to 3.91 percent from 3.93 percent the week before. Despite the drop, mortgage loan demand was relatively flat. The Refinance Index dropped 1.5 percent from the previous week and the Purchase Index slipped 0.6 percent. The Market Composite Index, which measures total mortgage loan application volume, fell 1.3 percent from the week before. The refinance share of all mortgage activity was unchanged at 76.6 percent. 
While businesses are dealing with the challenges of rising?business costs and a tighter labour market, there are bright?spots on the horizon. Small and medium enterprises (SMEs) can?look forward to more help from Enterprise Development Centres?(EDCs), as the government steps up its engagement efforts to?boost productivity in smaller firms.
Orchid Laundry is one of the approximately 60,000?SMEs that has benefited from collaborating with?an EDC over the past six years. Orchid Laundry?s?Director, Mr Harry Toh, explains, ?In 2011, our?company reached a roadblock when we faced
Besides approaching the EDCs, companies can?also access information on various assistance?schemes through the EnterpriseOne web?portal. The site provides businesses with?government information and e-services. It?received six million page views from more than 560,000?unique visitors last year.?To reach out to more users, a new EnterpriseOne iPhone?application has been launched. Jointly developed by SPRING?and Nanyang Polytechnic, the app brings together commonly?used features on the web portal and offers increased?accessibility to information on government assistance?schemes as well as SME-related news in Singapore.
In addition to plans to expand the reach of the?EDCs, SPRING has also increased funding support?to $200 million for SME capability development?programmes from April this year. This top-up?will benefit an additional 1,800 projects aimed at?building up capabilities and restructuring businesses for sustained?growth and competitiveness for SMEs. The enhanced support will?last for three years and will cover areas such as human capital?development, technology adoption, innovation and productivity.
What I was wondering if the auto repair shops are required to submit all repairs to Carfax. Are all repairs, auto body shops are supposed to be reported? What is reported and what is not. If someone has a dent removed from the car door and fixed in a repair shop, it was reported? Is it against the law if they do not report it. After looking around, I've learned ? No auto repair shops, insurance companies, etc. Are not required to submit information to Car Fax. About the only non-dealer. If you go to an independent ? will not be reported to Car Fax. The thing to remember, is a Car Fax profit. We are not a government agency. Collect information and sell it. Why would a company such as a repair shop or insurance company, give your customers the information away for someone else can sell and make money? Most do not. They will not violate their trust customers so another company can make money.![[ Back to EurekAlert! ]](http://www.eurekalert.org/images/back2e.gif){kind=small}
Public release date: 30-May-2012
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