Budget and Beyond Budgeting

Budgeting and beyond budgeting

Introduction

With the economic rapid develop recently, more and more companies pay attention to the cost budgeting, some people think that this is a good and efficient way to operate the company, it will take more benefit for them. However, some people believe that it is a inefficient method, it will waste long time and capital to do, and bring the little profit.

This essay wills analysis this issue from the different parts. The first part, it will talk about the respects of the traditional budgeting method form some sides. The second introduce the new budgeting method which named beyond budgeting. The third, it will compare with the traditional and beyond budgeting from the kinds of parts. Finally, I will give my own opinion and a reasonable conclusion about this problem.

1. What is the traditional budgeting?

CIMA’s Official Terminology of Management Accounting defines a budget as: ‘a quantitative statement for a defined period of time, which may include planned revenues, assets, liabilities and cash flows. A budget provides a focus for the organization aids the co-ordination of activities and facilitates control.

Since budgeting allows you to create a spending plan for your money, it ensures that you will always have enough money for the things you need and the things that are important to you. Following a budget or spending plan will also keep you out of debt or help you work your way out of debt if you are currently in debt.

In recent years, there are different viewpoints about the budgeting; some people thought that budgets are pilloried as being out of touch with the needs of the modern business and accused of taking too long, costing too much and encouraging all sorts of perverse behavior.

Advantages:

Traditional budgeting is a tool for control. 99% of European companies use a budget to control their business, help to monitor and control operations.

It promotes more forward thinking....