Budget

An estimate of the potential income and probable expenditure for a set period of time, which could typically be for the coming financial year. The expenditure element of a budget will typically consist of two areas: The operational day-to-day costs, and the longer term capital expenditure, such as for machinery or major infrastructure construction / building projects.

The purpose of a budget is to assist in forward planning and to identify possible areas that may present a problem, focusing on solutions in a timely manner. A budget helps an organisation be pro-active rather than reactive.

A budget can also help to communicate planned activities to others and to encourage responsible operational management through accountability, transparency and performance targets.