Budget planning is an important componentfinancial planning, which is subject to the requirements of financial state policy. Its essence from the economic point of view consists in the redistribution of GDP between the elements of the financial system when drawing up and approving budgets of various levels.
Budget planning is budgetaryprocess in terms of drawing up, approving and executing the budget. Its meaning is determined by the functions that are displayed on the budget policy of the state, the choice of directions for budget financing, based on the need for rational financing of the country's economic and social programs, establishing rational forms of mobilizing budget revenues and their optimal structure.
When developing the budget for the next year,to use only reliable indicators of incomes and expenditures of taxpayers, as well as consumers of budgetary funds. Since the development of various industries, regions and enterprises is interrelated, it is necessary to take into account this interrelation when forecasting the tax potential and other budgetary needs of the state.
Budget planning and forecasting are two economic instruments that allow to form a financial plan of the state for the future taking into account certain indicators.
The most important condition for conducting economicactivities for the purpose of profit at any level is the continuous improvement of management methods. There is a kind of doctrine among representatives of business: "To manage is to foresee." In connection with this worldview, planning and budgeting based on forecasting for the future increasingly takes its position. If financial planning is carried out for a long period, the budget is calculated for one year (budgetary) and is necessarily approved by a special legislative act.
Budget planning is carried out in the form ofdevelopment and justification of the optimal way of development of the state through the approved budget (it is a kind of balance at the state level between incomes and expenditures). At the same time, the budget balance can be either positive (surplus) or negative (deficit).
With budgetary forecasting,various mathematical methods: extrapolation, which takes into account the results of previous periods; and expert assessments, which is based on assessments of specialists in individual branches of science.
If budget planning (mostly)is applied at the state level, budgeting creates an integral and effective management system and a separate business entity. At the same time, with a competently built budgeting system, the company has an opportunity to achieve those strategic goals that are determined by the company's management.
The term "budgeting" in English means "planning".
In medium-sized companies it usually comes down to onlyto the creation of estimates of income and expenditure. With the increase in turnover, it becomes necessary to conduct a more detailed analysis of its economic indicators using all the same mathematical methods. Thanks to the efforts made and the additional funds spent, the manager will always have information about the state of his business both in the enterprise as a whole and in its separate structural subdivisions.
Budgeting should be used when attracting foreign investment. After all, any investor will want to have truthful and reliable information about his future business.