Why do we Need a Master Budget in our business?

[Jasz]

A master budget is an estimate of the business’s financial performance for a specific period of time, typically one year. It includes income and expenses for all departments, as well as the planned capital expenditures and investments. The master budget is a key tool in helping you manage your business.
Why do we need a master budget in our business?

The master budget helps you to:
Plan ahead: The master budget helps you plan ahead by forecasting revenues and expenses for the coming year. It’s important to know how much money will be coming in so that you can set aside funds for future investments or capital expenditures (CAPEX).

Gauge potential profits: The results of your master budget should give you an idea of how much profit your company may make in the coming year. This information will help you determine whether or not it would be worthwhile to make any changes to your pricing and marketing strategy, or if it would be better to continue with what has been working so far.

Track performance: Once you’ve completed your initial budgeting process, use it as a benchmark for measuring actual results against projected numbers throughout the year. This way, if there are any major variances between projected values and actual results at any point during the fiscal period, measures can be taken on time.

 

[Holicent]

A master budget is a formal, systematic plan for the future of a business. It is a financial forecast that shows how much money you expect to make and spend over a given period of time. Master budgets are used by businesses to help them anticipate what kind of cash they will have available in the future and how much money they will be spending on different things.

A master budget helps businesses make informed decisions about how they should spend their money and what areas are most important to them. The budget can help companies prioritize expenses, so they know where to spend their money first. For example, if your business has $100,000 per month in revenue and $40,000 per month in expenses, then your master budget would show that you have enough money left over each month (net profit) for your company to hire more employees or expand into new markets.

The main purpose of a master budget is to help you keep track of the financial health of your business at all times. By looking at your historical data (past performance), you can predict what kind of financial future lies ahead for your company based on current trends and forecasts.