A budget is a formalised planning tool used by management to compare expected revenues with expected expenses for the year (Finkler & Kovner2000). The objective of budgeting is to maximise organisational resources to meet short-term and long-term goals (Marquis & Huston 2003). A budget is therefore a written financial plan that aims to control resources (Huber 2000).
The preparation of a budget ensures that managers plan ahead and forecast the future—anticipating changes that will affect the organisation so that action plans can be formulated accordingly. For example, a decreasing birthrate is likely to lead to an overall decrease in patient days in the maternity wards. A budget can (and should) be used by managers to motivate themselves and their staff to work positively meeting their organisation’s goals.
- Budgeting concepts in health care
- Types of budgets
- Capital budgets
- Operating budgets
- Personnel budgets
- The budget process
- Variance analysis
- Current issues and future directions