Introduction

‍In the world of corporate finance, terms such as budget, budget, forecasting and rolling forecast are common. But what exactly do they mean and how do they differ from each other? In this article, we'll dive into each of these concepts to understand their unique features and uses.

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Budget

‍A budget is a detailed plan that shows expected income and expenses for a specific period of time, usually one year. It helps companies:

• Set goals: By planning how much you expect to earn and spend, you can set clear financial goals.
• Allocate resources: With a budget, you can decide where to spend your money and where you can save.
• Measuring performance: By comparing your actual income and expenses with your budget, you can see where you're on track and where adjustments are needed.

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Budget

‍A budget is similar to a budget, but it is often more specific and focused on a specific area or department within a company. It can be seen as a financial blueprint that helps manage and control spending within established limits. The benefits of budgeting are:

• Detailed tracking: This allows you to track specific cost items, such as marketing or product development.
• Responsibility: Departments or teams have a clear idea of what they can spend.
• Flexibility: Budgets can be adjusted throughout the year based on changing needs or circumstances.

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Prognosis

‍A forecast is an estimate of what will happen in the future based on historical data and current trends. Unlike a budget or budget, which is often static, a forecast can be updated regularly as more information becomes available. Forecasts are useful for:

• Future planning: This allows you to anticipate future financial needs or challenges.
• Risk Assessment: By predicting what might happen in the future, you can prepare for possible risks.
• Strategic decision making: Forecasting can help you decide where to invest or which markets to enter.

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‍ Rolling Forecast

‍A rolling forecast is a type of forecast that is continuously updated. Instead of being limited to an annual review, a rolling forecast is usually updated monthly or quarterly, allowing companies to respond more flexibly to changing circumstances. Benefits are:

• Adaptability: This allows you to respond quickly to changes in the market or within your company.
• Continuous planning: Instead of planning once a year, you can constantly update your financial strategy.
• Accuracy: By updating regularly, your forecasts are likely to be more accurate and relevant.

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Conclusion

‍Whether you're setting a budget, managing a departmental budget, forecasting future income and expenses, or using a rolling forecast to stay flexible, each of these financial instruments plays a critical role in your company's success. By understanding how they work and when to use them, you can make more informed financial decisions and lead your company to growth and success.

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Call to Action ‍

Keeping track of various financial forecasts, such as budgets, budgets and, in particular, rolling forecasts, can be a challenge with traditional tools such as Excel. Liquid is specifically designed to support all of these forecasting, making the process streamlined and error-free. With Liquid, even keeping a rolling forecast, which is usually the most time-consuming and complex, is a piece of cake. Ready to take your financial planning to the next level and simplify the management of your forecasts? Learn how Liquid can help you and contact us today for a personal consultation.