WHAT IS A BUDGET?
Businesses use budgets to track revenue and expenses in sufficient depth to make operational choices.
Budgets are often oriented towards the future. Both income and expense are based on forecasts and predictions for the periods they cover.
STEPS TO TAKE IN ORGANISATIONAL BUDGET PREPARATION
1. Recognize the objectives of your organization
It’s critical to have a clear grasp of the objectives your organisation is pursuing during the budgetary period before you create your budget. You may create a budget that supports and aligns with those objectives by having a clear grasp of them.
2. Calculate Your Income During the Budgetary Period
You must first make the most accurate determination of your income and cash flow for the time period in order to allocate funds for business expenses.
You should also include income from other sources, such as returns on investments, asset sales, and bond or share issues, in addition to income from sales activity.
3. List all of your expenses.
You need to make an estimate of your expenses after you know your predicted income for the time period. Three key categories are involved in this process: fixed costs, variable costs, and one-time expenditures.
Any costs that are fixed over time and don’t significantly change from one week or month to the next are referred to be fixed costs. Examples:
Variable costs are those that your company incurs that change over time based on a variety of circumstances, including sales activity. Your distribution and shipping fees.
One-time costs, often known as “one-time spends,” are less common and don’t happen frequently. purchasing facilities or equipment.
How To Calculate Your Laboratory’s Operating Costs.
Planning is essential for running a successful laboratory. Budgeting is a crucial step in the planning process. The plan to spend money is called a budget.
Understanding the cost incurred in running of laboratory
Fixed Costs: Fixed costs remain constant and do not change over time or as the research volume increases or decreases.
Variable Costs: Both time and the volume affect the variable costs.
Direct Costs: Direct costs are directly connected to the laboratory output.
Indirect Costs: Indirect costs are the overheads not directly connected to the output of the labs.
Examples:
Fixed Direct Costs: Equipment purchases, License Fees, Researchers salaries.
Fixed Indirect Costs: Rent, Utilities, General administration and Support staff.
Variable Direct Costs: Reagents, Test supplies, Consumables
Variable Indirect Costs: Waste management, Space/rent. Utilities.
Budgeting Methods: The most common budgeting techniques used by laboratories to determine their operational costs are:
INCREMENTAL BUDGETING: For the upcoming fiscal year, actual spending from prior years are increased/decreased using the incremental budgeting method.
ZERO-BASED BUDGETING: With this approach, everything is planned out in advance. The budgeting process starts from scratch with a basis of zero. It’s a difficult procedure that requires carefully examining and defending every expenditure.
TOP-DOWN BUDGETING: Budgets are distributed top-down, starting at the top of the organisation and working their way down to each department. Laboratory managers are needed to identify operations that fall within the assigned budget after the budget has been determined.
BOTTOM-UP BUDGETING: In the bottom-up technique, each department determines its own budget requirements, which are then put up until it reaches complete organization.
Calculate the surplus or deficit in your budget. You can add your income and expenses to your budget once you’ve taken stock of everything.You have a budget surplus if your income is more than your expenses. Knowing this, you should choose the best way to allocate extra money. On the other side, you have a budget deficit if your spending are higher than your income. You now need to decide the best course of action for closing the gap.