Question

1. How is the financial plan and budget related to a company’s strategic plan?

2. How do the various functional departments of an organization use financial planning (i.e. marketing, operations, sales, executive management, finance, etc.)?

Answer 1

1)

"A Budget is a money related or a quantitative articulation arranged and endorsed preceding a particular timeframe, of the approach to be sought after during the period to accomplish a given goal and may incorporate the salary and costs caused during the particular time frame" as expressed by the C.I.M.A. London. The point here is that a spending plan is arranged well ahead of time for example it is an aspect of the vital arrangement of the organization. To comprehend it better the organization has certain key objectives to be accomplished in the new monetary year, so it trains the Budget Committee to think about these focuses while setting up the spending plan for the following money related year. All the key plans are deliberately examined and the objectives are figured in while setting up the Master Budget for the money related year. The vital objectives could be : reduced down in representative expense for a specific office and this should be calculated in while setting up the spending plan for that specific division.

2)

There is a Master Budget arranged at the organization level first and close by all the practical offices likewise would have their separate financial plans. So every office would have its individual financial plan anyway extensively the focuses to be remembered while setting up a spending plan would be:

a) To decide the objectives of execution for every division for the period for which the spending plan is readied.

b) To decentralize the obligation to the individual administrators.

c) To plan and control the consumption as recommended in the vital standpoint.

d) To show the administration where activity is needed to change a current circumstance.

e) To blend all the philosophies of the administration while setting up the spending plans.

So all the practical divisions in an association set up their individual financial plans and it at long last lines up with the key plans of the organization and these financial plans could be either Flexible Budgets or Fixed Budgets.

They utilize this to check if all the boundaries are leveled out and there is no colossal fluctuation in the separate heads of costs. Spending plans are the rules for the offices to stick to and any gigantic or noteworthy fluctuation will be researched and controlled so as to accomplish the key objectives of the organization for the budgetary year.