Question

what sort of challeges might be involved in drafting a realistic budget.

Answer 1

Challenges involving interacting of a budget

Creating a budget is easy when it's for your own household. but when the budget is for your business with multiple expense categories and variety of decision makers, things can be little complicated.

here are a few challenges you will face when building a budget for your business

1. your information is inaccurate

2. Don't have the right tools

3. Budgeting takes time and huge managerial skills

4. A budget is only as useful as you make it.

budget is based on a set of assumptions that are generally not to for distance from the operating conditions under which it was formulated. is the business environment changes to any significant degree, the company's revenues are cost of structures may change so red coloured apart from the expectations delineated in the budget.

the budgeting process only focuses the attention of the management team on strategy during the budget formulation period near the end of the fiscal year. For the rest of the year, there is no procedural commitment to revisit the strategy. thus, if there is a fundamental shift in the market just after a budget has been completed, there is no system in place to formally review the situation and make changes, there by placing a company at a considerable disadvantage to its more nimble competitors.

an experience manager mein atom to introduce butter is like, which involves deliberately reducing revenue estimates and increasing expenses, so that he can easily achieved favourable variances against the budget. this can be serious problem, and requires considerable oversight to spot and eliminate.

if a department does not achieve its better results, the department manager Maybelline any other departments that provide services to eat for not having adequately supported his department.

The budget may prescribe that certain amount of overhead costs to allocate various departments, in the managers of those department may take issue with the allocation methods used.

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