Budgets are an area that many would prefer to ignore, but for a business, it is essential! To prepare a through budget, an accountant would begin with a critical analysis of the most recent complete financial performance and position of the business. A review with managers and owners of their specific goals for the coming year would also become an important factor to the budgeting process.
A budget, in its most basic form, is a financial blueprint for the business.
This process does demand a fair amount of time and energy, but that effort is what provides for a resourceful budget. Construction of a good budget could become a strong incentive for businesses to develop financial models that not only help in the budgeting process but also help managers in making strategic decisions.