I believe that there are times when a traditional budget may be the
best option, They are very useful for strategic planning and
pinpointing specific areas or departments that are are not operating
as efficiently as possible. They are based on historic information and
organized. b On the other hand, that information can be stale and
inflexible. The bigger concern and what I experience with my own
company is that too often the decision are based solely on staying
under budget and doing so is often tied directly to the bonuses of
executives.
Using an alternative approach that is more flexible and encourages
everyone in the company to think more critically about expenses and
efficiency of operations seems like a better approach. Sometimes
the decision that is best for the company in the long run, does not fit
in the current budget but should still be considered. The ability to
make changes closer to real time and takes into account best
interests and not just an immediate return on the investment would
be more important to me.
Michele
Datar, S. (n.d.). Horngren’s Cost Accounting: A Managerial Emphasis
(16th ed.) [E-book].
P. (2022, April 20). Advantages And Disadvantages Of Budget | What is
Budget?, Advantages and Limitations of Budget. A Plus Topper.
https://www.aplustopper.com/advantages-and-disadvantages-of-
budget/
Rygelski, M. (2018, January 5). Budgets Don’t Work: Here’s How
Businesses Can Do It Differently. Forbes.
https://www.forbes.com/sites/forbesfinancecouncil/2018/01/05/b
udgets-dont-work-heres-how-businesses-can-do-it-
differently/?sh=58f638f46b8a
