Budgeting Process

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- Performance-Based Budgeting

Performance-based budgeting aims to improve the efficiency and effectiveness of public expenditure by linking the funding of public sector organizations to the results they deliver, making systematic use of performance information.[5] This methodology behind this is to establish a closer link between the dollars spent and the results obtained. The performance-based budget process should begin by establishing policies within our company that outline the goals and objectives. Each budget manager needs to develop performance measures that reflect the achievement of each goal/measure that has been identified. By implementing quantitative metrics one is able to assess expected results. This process will allow greater flexibility for managers who will be more accountable to the results of the budget.

- Performance Audits

A performance audit will determine the efficiency, effectiveness and economy of the organization.[6] Regular and special audits should be conducted to ensure that employees are held accountable for both their actions and the results of the decisions that have been made. These audits should not be punitive in nature, but should be used to identify problems that need to be addressed. In the areas in which there has been documented success, rewards should be given to provide positive reinforcement.

- Competitive Bidding

In order for a company to keep expenses at a minimum, we must implement a competitive bidding policy. In the free marketplace, all companies are attempting to earn business and increase their bottom line. As a result, competition can be quite fierce. In order to take advantage of this we will engage in competitive bidding wherever possible. Using this transparent procurement method, we will obtain bids from competing contractors, suppliers and vendors by openly advertising out scope, specifications, terms and conditions of our requirements.[7] We will attempt to obtain any goods and services at the absolute lowest possible price without sacrificing quality of our goods or services.

Conclusion

Preparing the annual budget does not need to be an arduous process. Working together we can make fundamental changes to the approach and reduce expenses and wasteful spending. Begin with a “clean slate”. Remember that a budget should ensure that we have just enough resources to complete the company’s goals. Look at the sending patterns of years past before you begin the next year’s budget to look for any trends such as increased spending in the last few weeks or months of the fiscal period. Let’s encourage better fiscal responsibility amongst our employees and reward those that are serious about our company’s future.

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