Benefits of introduction of a budget system in the company
- The flexible budget system allows to purposefully manage the business. A correctly prepared company budget displays the objectives pursued. When a change in the business situation happens, changes to business objectives and budget changes are made accordingly.
- Reduces unnecessary costs. Constantly comparing the budget with the facts highlights unjustified costs.
- Allows to set priorities. While forming a budget and allocating resources a company's priorities are set accordingly.
- Creates new habits and changes company culture. A working budget system elevates the whole company management a step higher, decisions are more justified because everyone is working with specific numbers.
- Reduces tension in everyday work. Since the priorities are set when creating the budget, less discussions are needed when tackling certain problems.
- Better control. While having a budget it is always possible to understand the current situation - why it is different from the one being planned and what next steps to take.
- Effort coordination. The budget covers the whole company; therefore, everyone's input into the pursuit of goals is clearer.
- Converts money into a real management tool. The link between cash flow and the objectives pursued is revealed.
- Sets consumption limits. If the budget is not balanced and there is a possibility of a money shortage, the cash flow in the budget will show it.
- Creates grounds for saving. Constant work with budgets over time creates a basis for money and other resources to be saved..
- Allows to achieve goals faster – the main benefit of setting up a budget system in a company.