Fixed budget
Concept: also known as static budget, is based on the budget period normal, achievable level of a certain amount of business as the basis for the preparation of the budget.
Characteristics: it is the budget made by this method, counting how much is how much, the amount of the general situation is unchanged. Therefore, it is suitable for fixed costs or budget items where the amount is relatively stable.
Flexible budgeting
Concept: Flexible budgeting is based on the customary classification of costs (expenses), based on the dependence between volume, cost, and profitability, and taking into account the possible changes in the volume of business during the planning period, a set of cost budgets adapted to a wide range of business volumes are prepared.
Features: is designed to reflect is the level of expenses payable in different business situations, it is to make up for the shortcomings of the fixed budget and came into being.
Enterprise budgeting, generally in accordance with the "up and down, hierarchical preparation, level by level summary" procedure.
(1) issued goals
Enterprise board of directors or the board of managers according to the enterprise development strategy and the budget period of the economic situation of the preliminary prediction, on the basis of decision-making, put forward the next year's enterprise budget objectives, including sales or business objectives, cost objectives, profit objectives and cash flow objectives, and to determine the policy of the budgeting by the budget committee issued by the budgetary implementation of the unit. .
(2) Preparation and Reporting
Each budget execution unit, in accordance with the budget objectives and policies issued by the enterprise budget committee, combines its own characteristics as well as the projected execution conditions, and puts forward a detailed budget program of its own, which is reported to the financial management department of the enterprise.
(3) Review and Balance
The financial management department of the enterprise reviews and summarizes the financial budget proposal submitted by each budget execution unit and makes a comprehensive balancing proposal. In the review and balancing process, the budget committee should be fully coordinated, the problems found to put forward preliminary adjustments, and feedback to the relevant budget execution unit to be amended.
(4) Consideration and Approval
The financial management department of the enterprise shall prepare the enterprise budget program on the basis of the corrections and adjustments made by the relevant budget execution unit and submit it to the Finance and Budget Committee for discussion. For matters not in line with the enterprise development strategy or budget objectives, the enterprise budget committee shall instruct the relevant budget implementation unit to further revise and adjust. On the basis of the discussion and adjustment, the enterprise financial management department formally prepares the draft annual budget of the enterprise and submits it to the board of directors or the board of managers for consideration and approval.
(5) issued by the implementation
Enterprise financial management department of the board of directors or managers will consider the approval of the annual budget, generally before the end of March of the following year, broken down into a series of indicators system, by the budget committee level by level under the budget implementation units.