Question

What influences may compromise (or skew) a company's budget? (Consider the process of making a budget; also please do not refer to personal budgets in this answer).

Answer 1

Budgeting is essential for calculating the future requirement of funds as well as compare the expected result with the actual result of the company. However, there are several factors which affects the company's budget. some of these factors are listed below:

1. Budgeting can only be done for the reliable source of revenue. so if the source of revenue is not certain that can not be taken aganist the expenses of the company. So first of all certainity of the receipt of the revenue must be checked.

2. Government rules and regulations must be kept in mind while deciding on the budget. it may be possible that company is expecting some extra revenue from a particular state or commodity but the same is being restricted by the government. so, they have to change budget accordingly.

3.Industry analysis is very crucial for making a reliable budget because it helps to understand the industry trend in the market and what are the requirements to survive in the industry.

4.Positive and negative aspect of the oppourtunities must be calculated to streamline the revenue of the company.For this prior period decision should be taken into account.

5. Other factors like business goals, national and international events may also affect the budgeting process.