Budget Process Paper

The Budget is а financial plan listed in а statement that shows the expected expenses and income during а specific period of time known as Budget Period (Cambridge, 2016). This Budget period usually specified by the organization and referred as а fiscal year. The Budget Period can be both long or short term, and this depends on the organization’s type. Budgets are required for reasons; to show the financial implications of plans; to determine the resources needed to achieve the plans; to provide a means to measure, monitor and control the results against the plans.

As а leader for а small health care organization, you need to follow steps to help you develop the budget. There are ten steps will help in developing and managing the budget. First

The organization takes steps each year to implement its strategic plan and this is known as annual business goals. Goals are developed by the organization and the budget is needed to achieve these goals by providing the financial resources. For instance, if the organization has an objective to expand its space, there is а need to be enough budget to make this expansion.

Third step is the revenue projections. Revenue projections must be based on projected growth income and the past financial performance. The projected growth is linked with planned initiative and the organizational goals that will begin business growth. For instance, if you have goal to increase your organization’s sales by 15%, those projections must be а part of the expected revenue for the year.

The fourth step is fixed cost projections. In this step look at monthly predictable costs that is unchangeable such as utility costs, employees’ compensation costs, rent payment, facility expenses, and insurance costs. Those fixed cost usually do not alter and are the least expense that require to be funded in the budget. For instance, if there is an open position for new employees, the cost for those position should be considered as а part of fixed cost

The budget should be given to goal related projects. Every initiative must have costs of the project that associated with the project goals. This step is where implementing goals cost are incorporated into the yearly budget. For instance, if а goal of an increase sales by 15% is set by the sale department, the cost associated with this goal should be included in that budget.

The seventh step is to target profit margin. Each organization either not-for-profit or for-profit, should has a targeted profit margin. This will allow profits to return to the organization’s owner. Organization who is not-for-profit reinvest its profit margins into the development and the facilities of the organization. Profits are considered important to business and profit margins are indicator for the organization’s strength and success.

The eighth step is to get board approval for the budget plan. The budget should be approved by the board president or the organization’s head. The organization’s head should keep updated with the budget performance by reviewing the financial statement monthly. By reviewing it monthly, he or she can monitor the performance of the budget, to know all the expenditures, to protect the business against fund misappropriation or employee