In page navigation
A system of controlling expenditure and income used by the management of a business. Each department in the business forecasts its probable expenditure or income for the coming financial period. These forecasts or budgets are scrutinized and approved at top management level, so that a provisional profit and loss account for the coming year can be drawn up and, if necessary, expenses pruned or sales policies revised. The system varies from firm to firm. Generally speaking budgets must be adhered to and any deviations during the relevant period are reported so that action can be taken if necessary. The major benefits that should arise from an effective budgetary control system include: (1) the availability of cash to fund a foreseen capital expenditure programme; (2) the minimization of the risk of overtrading.
Reference: The Penguin Business Dictionary, 3rd edt.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >