How budgets contribute to planning, control and motivation in an organisation.

Businesses have to prepare for the future, companies have to set out their goals that they want to achieve and aim towards them. The purpose of a budget is to estimate the income and expenditure of a business or a part of a business over a time period. It is essential for a business to have a good budget as it helps the company in a variety of situations, it is a detailed plan and …

…was simply a false economy? In creating the budget other departments (Marketing, Human resource Management and Production) may be asked to submit figures, estimates and comments. In this way the budget will act as a co-ordinator and a motivator - especially if budgeted targets are achieved. When having a set task at hand managers can often perform better at there individual roles. `defining a required level of achievement` often encourages the manager and motivates them.