Budgeting refers to the process of creating a plan on how to allocate and spend organizational finances. It involving balancing between income and expenses. Conversely, planning is a managerial role that involves setting goals and objectives and determining a suitable course of action to achieve those objectives.
Why are planning and budgeting so important to an organization's success?
Planning is vital to an organization's success because it entails preparing for future organizational activities. It provides top management with information needed to make effective decisions of allocating resources to meet an organization’s goals and objectives ( Gooch, 2019) . Planning increases organizational productivity because it helps top management to make realistic and achievable goals and objectives. Organizational productivity is maximized when appropriate strategies are adopted to guide how resources are managed. When an organization does proper planning, it will be possible to achieve all its goals because all activities will run as projected, leading to an organization's success ( Liaropoulos & Goranitis, 2015) . Therefore, planning is an essential management function that directly contributes to an organization's success.
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On the other hand, budgeting is a basis for business success because it balances cash flows, reduces costs, improves profits, and increases investment returns. It helps properly control an organization's finances through proper allocations in productive projects to improve corporate performance and productivity ( Gooch, 2019) . Furthermore, budgeting ensures that an organization allocates enough resources to its current commitments and business activities to achieve expected goals. In doing so, it will be possible for a company to improve its success rate when it is capable of accomplishing its goals and objectives ( Gooch, 2019) . Lastly, budgeting can enable a company to meet its objectives and make confident financial decisions by ensuring that it has enough financial resources to meet future financial commitments. Accordingly, planning and budgeting are crucial management functions for an organization's success.
References
Gooch, K. (2019, January 24). 3 financial pain points for healthcare CFOs . Becker's Hospital Review - Healthcare News. https://www.beckershospitalreview.com/finance/3-financial-pain-points-for-healthcare-cfos.html
Liaropoulos, L., & Goranitis, I. (2015, September 15). Health care financing and the sustainability of health systems . International Journal for Equity in Health. https://equityhealthj.biomedcentral.com/articles/10.1186/s12939-015-0208-5
Stymiest, D. (2014). Smart money. Making a case for hospital infrastructure funding. Health facilities management , 27 (1), 27.
United Hospital Fund. (2018, January 18). Convenient care: Retail clinics and urgent care centers in New York State . New York State Health Foundation. https://nyshealthfoundation.org/resource/convenient-care-retail-clinics-and-urgent-care-centers-in-new-york-state/
