Compare budget and forecast.

Banking & FinanceManagementCompanies/Organisations

The major differences between budget and forecast are as follows −

Budget

  • It’s a business plan made by management for future with quantitative.

  • It shows what a company want to achieve during a period of time.

  • Generally, it is short term.

  • It is static in nature.

  • It is used as tool to manage operational performance in short term.

  • It sets the targets.

  • It is updated annually.

  • There is variance analysis.

  • Covers large areas like costs, revenue, profits etc.

  • Almost everyone will aware of budget.

Forecast

  • It is based on historical data; future trends can be estimated.

  • It tells about what a company will achieve in a specified period.

  • Generally, it is long term.

  • It is more flexible.

  • It is used as input for preparing budget.

  • It has no targets.

  • It is updated at regular intervals of time.

  • There is no variance analysis.

  • It is very narrow and covers only revenue and expenses.

  • Only management and team leaders will be aware of forecast.

raja
Published on 27-Jul-2020 11:45:56
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