Preparing a Budget
One of the tasks financial officers face, especially for an organization that makes frequent business transactions, is that of preparing a budget. A budget is a tool used for planning and controlling financial resources. It is a guideline for an organization’s future plan of action, expressed in financial terms within a set period of time.
What a budget accomplishes
- It helps refine goals.
- It compels members of the organization to use funds efficiently.
- It provides accurate information to analyze, adjust and
- evaluate programs and activities.
- It aids in decision making.
- It provides a historical reference to be used for future planning.
To prepare the budget it helps to know the organization’s priorities, objectives, and goals. Upon starting, ask the following questions:
What is the time period in question (e.g., one semester, entire school year)?
- What does the group want to accomplish most?
- How will this be accomplished?
- How much will it cost?
- What are the funding sources?
Once these questions have been answered, begin preparing your budget.
Preparing your budget
- Determine and record available funds (e.g., carryover balance from previous year).
- Estimate and record expected income and when it will be available (dues, t-shirt sales, etc.).
- Define and record needed expenses (advertising, rentals, printing, supplies, etc.).
- Review, revise, and then assemble into a final budget.
- Have members vote for budget approval.
Managing the budget
The budget must be flexible to anticipate conditions that might have been overlooked during the planning process.
- Set and maintain a minimum balance.
- Formulate general policies and procedures needed to provide internal control (e.g., allow only approved expenditures).
- Keep an accurate written log of financial transactions (income and expenses).
- Periodically and regularly compare the budget to your actual account statement of activity.
- Report financial matters on a regular basis to the organization.
- As the budget period is ending, compare the budgeted amounts to the actual expenditures and revenues.
- Review the data in order to establish priorities for the next budgeted period.
- Begin preparing for the next budget a month or more prior to the conclusion of the current budget period and then begin the process anew.