Budgeting vs forecasting

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Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2012 Please let me know the difference between budgeting & forecasting.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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30 August 2012 A forecast looks the same as a plan or budget and the mechanics of putting a forecast together are the same as for a plan or budget. However a forecast is really quite different from a budget, principally because of the way it is used, and the data it contains. If you use them wisely forecasts will be the major tool in ensuring you never run out of cash.

Unlike a budget, a forecast is not intended to be a goal - it is more passive. A forecast is really just a vehicle to allow you to peer into the future and make predictions about what is likely to happen. The sales you put into a forecast will normally be those you believe you are most likely to make over the coming months.

in view of above say that Both are relating to the estimation of future but , if we deeply study the both concept we can get following differences between them. :-

1st Difference
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Budget is based on planned events . We actually makes stand in advance and then control our position

forecasting is just estimation of uncertain future for making planning .

2nd Difference
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Budget is made for one financial period

Forecasting is for long time.

3rd Difference
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It is necessary for budget or corporate to make budget

forecasting is suitable in that field where we do not make budget.

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