Banking Systems B1

 Budget

• a statement of the financial position of an administration (as of a nation) for a definite period of time based on estimates of expenditures during the period and proposals for financing them

 Budgeting

•  to put or allow for in a statement or plan coordinating resources and expenditures : to put or allow for in a budget

Operating Budget

• Operating budgeting is creating a detailed financial roadmap for a business's daily activities, forecasting revenues and expenses (like salaries, rent, materials) for a specific period (usually a year) to control costs, allocate resources, manage cash flow, and ensure alignment with overall goals

Capital Budget

• a financial plan for evaluating and funding major, long-term investments (capital expenditures) like new equipment, buildings, or expansions

Cash Flow Budget

• a financial plan that forecasts a business's or individual's cash inflows (money coming in) and outflows (money going out) over a specific time, like a month or year, to ensure enough liquidity for operations, investments, and debt payments

Revenue Forecast

• the process of predicting the amount of future income a business is likely to receive over a specific time period, such as a month, quarter, or year

Expense Forecast

• projection of future costs, essential for budgeting and financial planning, that involves analyzing past spending data and current trends to predict upcoming fixed and variable expenses

 Fixed Costs

• a business expense that remains constant and doesn't change with the volume of goods or services produced, making it predictable for budgeting, with common examples including rent, salaries, insurance, and loan interest

 Variable Costs

• business expenses that change in direct proportion to the volume of goods or services produced; they rise with increased output and fall with decreased output, unlike fixed costs

Direct Costs

•  expenses that can be directly traced to a specific product, service, or project, and they are essential for a business to produce what it sells

Indirect Costs

• general business expenses, also known as overhead, that aren't directly tied to producing a specific product or delivering a particular service but are essential for overall operations, including rent, utilities, administrative salaries, accounting, and marketing

Budget Variance

• the difference between budgeted financial figures (costs, revenues) and actual results, revealing performance gaps or successes

Surplus

• generally means having more assets or funds than liabilities or expenses, representing excess capital or earnings not needed for immediate obligations, essentially meaning having too much of a certain thing

Deficit

• expenses or liabilities exceed income or assets over a period, essentially meaning having too less of a certain thing

Contingency Fund

• a reserve of money set aside for unexpected costs or potential emergencies

Break-Even Analysis

• financial tool used to determine the point at which a company's total revenue equals its total costs, resulting in zero profit or loss

Strategic Planning

• the process of defining an organization's long-term direction, priorities, and actions to achieve its goals

Forecasting

•  the process of using historical and current data, combined with patterns and trends, to make informed predictions about future events

Budget Approval

• the formal process where proposed spending plans, whether for a government or a company, are reviewed, debated, and officially accepted by the governing body (legislature or executives/board), determining how funds are allocated for services or operations, often involving intense negotiation, committee hearings, and final votes, with failure to approve leading to shutdowns or financial gridlock

Monitoring & Control

• a core management process of observing project progress, comparing actual performance to the plan, analyzing deviations, and taking corrective actions to keep the project on track, within budget, and meeting objectives, ensuring success through continuous oversight and data-driven decisions

Departmental Budget

• a specific financial plan detailing estimated income and expenses for a single division (like Marketing, HR, or IT) within a larger organization

• Budget Variance

Budget Variance = Actual Amount – Budgeted Amount

Break-Even Point

Break-Even Point (Units) = Fixed Costs ÷ (Selling Price per Unit – Variable Cost per Unit)

• Cash Flow Forecast

• Net Cash Flow = Cash Inflows – Cash Outflows