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What is a budget cycle?

It is the most current budget cycle. The annual budget period for most companies globally is from January 1 to December 31. As the word budget cycle suggests, budgeting is an ongoing process. Once a company is done with one budget cycle, it gets time to start preparing for the next budget cycle.

Why is a budget cycle important?

Also Read: Budgeting Process – Meaning, Approaches, and Steps Thus, we can say that the budget cycle helps to control costs, assist the finance department in the preparation of the reports, and help management make more informed decisions. Now that you know the importance of a budget cycle, let’s talk about phases in the budgeting cycle.

What is the first phase of a budgeting cycle?

The first phase in the budgeting cycle is to create the budget. A business must use its leadership vision to decide on what to include and exclude from the budget. Also, the management should take the suggestions and recommendations of the ground-level employees.

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