Budget

Presented By :
Mr. Uttam Vaishnav
M.Sc. Nursing (Psychiatric)
 Meaning

• A forecast of the resources required to deliver the

services offered by the organization
• A plan for coordinating the financial goals of an
organization
• A formal , quantitative expression of management’s
plans, intentions, expectations & actions to control
results
 In summary

• A budget is a financial plan that includes estimated

expenses as well as income for a period of time.
• Fixed or variable/ either controllable or non-
controllable .
• Fixed expenses do not vary with volume, whereas
variable expenses do
 Purposes

Control costs

Accurately report Establish annual

all financial and & monthly
statistical data budget

Identify & analyze actual

experience compared to
the budget plan
 Characteristics

• It is a plan or program, framed on the basis of past

experience
• A scheme for action
• It should estimate revenues & expenditures as
accurately as possible
• It is comprehensive plan of action
 Features

Flexible

Synthesis of past, present & future

Product of joint venture or participation of
executive at different levels
It should be clearly defined
Form of statistical standard laid down in
specific numerical form
Represent expected revenue as compared
with anticipated expense
Facilitate goal achievement
 Principles

• Provide sound financial management

• Focus on objectives & policies of an organization
• Be flexible
• Budget necessitates a review of the performance of
the previous year & an evaluation of its adequacy
 Importance of Budget

• An essential management tool

• Budget tells you how much money you need to carry
out your activities
• Budget enables to monitor income & expenditure
• The budget is a basis for financial accountability &
transparency
Types of Budget
 Capital Budget

• Fund needed for the capital items for the growth

• New supplies & facilities & the replacement of worn out
equipment, machinery and furniture.
• The decision on capital budgeting is primarily is based on:
i. Needs of patients and existing alternatives
ii. Effects of additional equipment on income &
expenditure
iii. Availability of funds
 Operating Budget

• It provides an overview of an agency’s functions by

projecting the planned operations , usually for the
upcoming year.
• The nurse manager might include: personnel salaries ,
employee benefits, insurance , medical- surgical
supplies, office supplies , rent , light , house-keeping
• Both controllable and non-controlable expenses are
projected
 Personal Budget

• Estimates the cost of direct labor

necessary to meet the nursing
needs of the estimated patient
population.
• The current staffing patterns,
number of unfilled positions and
last year’s report can provide a
base
 Cash Budget

• Cash budget are planned to

make adequate funds available
as needed and to use any extra
funds profitably
• The ensure that the agency has
enough, but not too much , cash
on hand during the budgetary
period
Incremental Zero- Based

Budgeting
methods
Performance
Flexible
 Budgeting methods

Incremental
• Simplest method
• Budget for the coming year is projected
• Requires little budget expertise from the part of the
manager
Zero-Based
• Assumes the base for projecting next year’s budget is
zero
• Manager’s are required to justify all activities &
programs as if they are initiated for the first time.
• Every proposed expenditure must be justified with:
• current environment
• fit with organizational objectives
 Continues…

Flexible

• budget flexes over the year : up and down

• Flexible budget automatically calculates what the
expense is

Performance

• This method emphasizes outcomes and results instead

of activities and outputs
 Advantages

Places everyone on the management team

Helps to create cost awareness

Helps to measure individual & departmental productivity as
well as profitability
Produce cost savings
Provides a plan or forecast of what is expected.

Help clarify accountability & responsibility

Provides for communication within the organization

 Disadvantages

Over budgeting leads to over

Restrict the activities
Under estimation
expenditure
 Preparing a Budget Estimate
Income/ Actual Current year Budget Next Year
Expenditure
Last year Budget Actual Proposed Approved
 Role of Nurse Manager
• The administrator requires sufficient funds to support
sound program
• The administrator submits a budget request and a
justification for the proposed expenditures.
• Budget is presented to the president
• The budget is reviewed , analyzed and modified on the
basis of discussions of president and budget committee
• Once revisions are made , president presents the
budget to board of trustees for approval
 Continues..
• When the budget is approved , it has given
authorization to make expenditure and to collect
income as indicated in the budget
• When the budget is adopted , administrator is
committed to support the budget
• Once the budget is approved , it is the responsibility
of the administrator to see that expenditures do not
exceed the approximates 1 made to the institution