Forecasting and Budgeting in UAE
Financial Forecasting and Budgeting in UAE selects the most economical sources of finance and estimates the total capital requirements. This will help to determine the future financial activities of a company. The financial plans are prepared to manage the expenditures and fulfil financial goal of the company.
- Estimates of revenues and expenses
- Expected cash flows
- Expected debt reduction
- A budget is compared to actual results to calculate the variances between the two figures.
Budgeting represents a company’s financial position, cash flow and goals. A company’s budget is usually re-evaluated periodically, usually once per fiscal year, depending on how management wants to update the information. Budgeting creates a baseline to compare actual results to determine how the results vary from the expected performance.
While most budgets are created for an entire year, that is not a hard-and-fast rule. For some companies, management may need to be flexible and allow the budget to be adjusted throughout the year as business conditions change.
- Used to determine how companies should allocate their budgets for a future period. Unlike budgeting, financial forecasting does not analyze the variance between financial forecasts and actual performance.
- Regularly updated, perhaps monthly or quarterly, when there is a change in operations, inventory, and business plan.
- Can be both short-term and long-term. For example, a company might have quarterly forecasts for revenue. If a customer is lost to the competition, revenue forecasts might need to be updated.
- A management team can use financial forecasting and take immediate action based on the forecasted data.
Financial forecasting can help a management team make adjustments to production and inventory levels. Additionally, a long-term forecast might help a company’s management team develop its business plan.
Reasons for financial forecasts in UAE:
- LessenFinancial Risks:
The process of the business that consume most of the money can be detected with the help of Financial Forecast. The money can be pumped out of such processes to improve company’s financial risks and make it a profitable one. Financial Forecast will help in giving a better idea of risks and tactics to avoid it.
- Better Cash Flow Control:
Cash is an important part of the business and it is the main element the business manage first. Therefore, financial forecasting will help you to allocate funds to various tasks and help you guide in the right direction.
- Measure Financial Performance:
The future financial performance is measured and is compared against the standards set by management. This is one of the crucial aspects of financial forecasting. This will help in identification of loopholes, corrective actions, and improving company performance.
- Acquire Financing
The investments can be acquired with the help of financial forecasting because the data that are presented before the investors will make you much more credible. Attaining business finances to fund the operations of the businesses will be much more easier.
- Display of Financial Viability:
Financial Forecast checks whether the new business is financially viable. The projected expense and projected income can help you to get an exact idea whether the business will be good or not. It also helps to understand whether the strategies and plans designed is going to perform well or not.