Budgetary control is the process whereby managers set financial and performance goals by preparation budgets and then compare the budgeted performance with actual results and adjust performance as it is needed.
The following are advantages of budgetary control:
- It helps in the process of planning by reducing it to numerical concrete goals. Through the budget, the executive know what they are to produce or sell, how much they can spend, how much income to expect and so on.
- It centralize management control.
- It acts as control tool for administration.
- It promote cooperation among the different executive for determining future plans.
- It helps in determining the policies of the organization.
- It gives complete information in advance regarding the amount of capital needed for the budget period.
- It keeps expenditure in check and constantly remind employees and management of the target and goals to be achieved. it helps in the cautious utilization of resources and promotion of efficiency.
- As control devise, it supplies the means of checking results and comparing performances, of revealing weaknesses and making corrections.
- It provide an effective means by which top management can delegate authority and responsibilities without sacrificing its overall control. limits for each department or division are laid down in the budget.
- It gives the idea of where executive action is required.
- It aids in measuring performance of each department of the organization.
- The budget is not merely an instrument of planning but also a tool of coordination. It brings together the activities of various, section, department and division in an overall perspective.