Your Budget: A Powerful Financial Tool

Your organization probably has a budget. But is that budget helping you increase income and control expenses? If not, you can use your budget as a powerful financial tool starting now! Here’s how:


Follow these three steps to make sure that your organization’s financial goals are being met all year long:


  1. Set Expectations Upfront


Define the process and expected outcomes from the budget comparison. Establish a formal financial oversight process stresses its importance and sets clear actions and time frames. At a minimum, a budget comparison should include an income statement and a balance sheet with current and prior year comparative data.


  1. Take Action to Stay on Course


It’s not necessary to review every financial line item. Only significant line items and budget variances should be reviewed in detail. Those areas require more action to get to the root cause of variances or unexpected results. Explaining the root cause often helps you identify the corrective action that is needed to stay on course and meet budget goals.


  1. Keep your Results in Mind


Stay laser focused on your business objectives while comparing your budget with actual financial activities. Documenting the review and resulting decisions and actions help to track progress throughout the year toward meeting financial goals and overall business objectives.


Regularly comparing the organization’s budget to actual financial activity is worth the time and effort. It helps organizations to determine whether budgeted financial goals are achieved and provides an opportunity to make any changes needed to stay on course.