Question

At what levels in the organization are the budgets developed? Which types of leaders participate in the process?

Answer 1

The development of the budgets in the organization is an essential process to run the business effectively and efficiently and to create budget for running an organization smoothly requires all levels to contribute in the budget development and involves their decision in the budgets techniques and methods, In budget analysts analyse the revenue and expenditure over a period of time. Making budget is an internal process exercised by the mid-level management departments and top level management of the companies and it is not necessary to report these budgets to the external users like share holders, debenture holders and investment banks etc.

There are different types of budgets in the corporate are as follows:

1.) Sales budget

2.) Cash flow budget

3.) Master budget

4.) Financial budget

So, these kinds of budget requires the over-all knowledge of the outer market , industry and internal knowledge of all the processes like Marketing, Operations, sales , finance and administration to give rational decisions and information while preparing budgets. So the top executives of the management like chief financial officer, controller other board members have the main responsibility to supervise budgets and chairman or president of the company also sometimes can interfere in the budgets decisions.