The Difference Between Budgeting and Forecasting | Anamind
FAQs: The difference
between budgeting and
Part - 4
Powerful Planning! Simplified
What is the difference between budgeting
and forecasting? In a large organization, who
calculates each and how? I look at the
monthly reports sent out by the company and
the budget and forecast never match. Why?
Very good question and one that needs to be clarified
for understanding within the organizations as well.
Budgeting is usually an annual exercise done at the start
of the year and in some cases revised 6 months down the
It is basically wish of the company translated into
numbers on where they want to be next year in terms of
revenues and profits and how they shall achieve it.
Once done it is a constant number that is tracked against
the actuals during the year.
Forecasting is a recurring exercise done on a monthly or
a weekly basis to understand the current direction the
sales is moving and its effect on profits and cash flows.
Forecasts are different from budget because they do not
reflect the wish of the company but the market reality.
Forecasting helps companies identify the gaps with the
budget before it become a reality so that they can do
something to bridge the same.
The bridging of it is the tactical planning where teams
like marketing and sales get into action.
To understand more about the planning and forecasting
you may join our course on same
“A goal without a plan is just a wish.”
― Antoine de Saint-Exupéry
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