What are the advantages of budgets?
The advantages of budget are as given below:
a. Policy plans and actions considered are all reflected within the budgetary control system. The formal recognition, of the targets the business hopes to acquire.
b. Not merely departmental programmes are improved, over expenditures into departments are curtailed and controlled also.
c. Budgeting creates for better understanding, harmony and coordination of action into a business enterprise, since all departments take part within budget preparation.
d. The targets, policies and goals of a business enterprise are clearly explained.
e. Deviations through predetermined plans are brought to notice by variance analysis and corrective action is stimulated from statements, personal contacts and reports.
f. This provides management along with a guide of daily activities; therefore helps finding performance and efficiency of all departments, thereby leading to development.
g. This informs management the progress made in the direction of attaining the predetermined goals.
h. This facilitates financial control.
i. Total capital needed and price of a product (item) can be estimated within advance.
j. Budgetary control builds morale while operated into a truly managerial spirit, which is, it must not acquire just a clerical outlook or approach.