A budget is a detailed plan that outlines an organization’s expected revenues and expenses over a specific period, usually a year. Budgeting is more about creating a plan and setting financial goals. Forecasting, on the other hand, is the process of predicting future financial outcomes based on historical data and analysis of trends. Forecasting is used to anticipate results and inform strategic decisions.
Time Frame: Budgeting: Typically, budgets are set for a fixed period, often a fiscal year. They are usually set before the start of the period and may not change much during it. Forecasting: Forecasts can be made for any time frame (short-term, mid-term, long-term) and are often updated regularly (monthly, quarterly) as new data becomes available.
Flexibility: Budgeting: Budgets are generally more static and are considered a fixed plan for the designated period. Forecasting: Forecasts are more dynamic and are revised regularly based on actual performance and changing conditions.
