Budget vs forecast. Forecasts should be updated each year not reinvented. The first analysis i would run is what is variation between the actual vs. Current year forecast should represent a macro level budget.
In fact a good forecast feeds the development of a sound budget. The principal difference between budget and forecast is that budget is the financial plan prepared by the business for its future economic activities while forecast is just a prediction about future inflows and outflows. A budget and financial forecast should work in tandem with each other.
I would want to see these for different periods mtd month to date qtd quarter to date and ytd year to date. However even if you forecast a large increase in income you should not spend money in excess of your budget until the income comes in the door. The budget and the actual vs.
Forecasts should be fluid linked to changes in the business plan. A budget is a detailed financial outline of what the business thinks will happen over a period of time often a year financially. Forecasts should be macro product line level not skucustomer level.
During the year comparing the most recent forecast to the budget for the rest of the. To summarize the difference between budgeting and forecasting although they may look the same the budget and the forecast are two different things the budget is simply a target which management aims for the forecast is what the business expects to happen. Forecast since the addition of a forecast feature with quickbooks premier version 2003 the ability to create budgets and forecasts has been a source of confusion.
For example the forecasts both in the short term and long term could be used to help create and update the budget. Comments budgeting and. The difference between a budget and a forecast december 30 2018 steven bragg.
This is important because for example you may have a weak month during a strong quarter. A budget is a management tool used to forecast revenues and expenses during a specified period for the purpose of identifying avenues for cost cutting and be more efficient and productive in operations.