Introduction to Budgeting
The term “budgeting” refers to the strategic implementation of a scheduled business plan by an organization in order to achieve the desired goal of improving the current operating performance. It involves forecasting future expenses based on the expected revenue of the company. In other words, budgeting helps in developing a comfortable future financial position by taking care of all the financial expenses.
Some of the major reason of budgeting are as follows:
- Helps in planning for the crisis scenario such that the organization is able to take appropriate actions when such a situation arises
- Builds long-term rapport among departments as the process of budgeting requires the help of all the departments
- Provides a ballpark estimation to the management about the organization’s expenses for the entire period under consideration
- Helps all the teams in setting targets and goals for the period
- Can be used to compare the actual expense vis-à-vis the budgeted expense and then draw insights in case of variation
- Helps in evaluating the performance of employees against the set targets
So, now that we understand the importance of budgeting for an organization, let us now move to a career in budgeting. Well, it is a fruitful career for candidates with a finance background and, as such, in this article, we will discuss some of the top budgeting career in detail.
Top Budgeting Career
Some of the top careers are explained below:
1. FP & A Analyst
As an FP&A analyst, you will be taking care of the company’s budget as part of the financial planning department.
Responsibilities
The major responsibilities of FP&A analyst include:
- Performing quantitative analysis of the financial as well as operational data
- Building and managing all the business databases by analyzing and organizing a large volume of data sets
- Collecting and analyzing financial information of the company for preparing reports strictly for internal use only
- Evaluating the scope of new investment opportunities and projects
- Assessing the value of a company’s assets on the basis of their existing condition
- Recommending optimal capital structure (mix of debt and equity) and then determining the cost of capital
- Building the company’s budgetary forecast
- Building and maintaining the detailed corporate financial model of the company covering its ongoing operations and upcoming future projects
Educational and Experience Requirement
The FP&A analyst should have the following educational and professional background:
- At least a bachelor’s degree in the field of accounting, finance, economics or related discipline
- Master’s degree such as an MBA is preferable
- Other preferable qualifications include Chartered Financial Analyst (CFA), Certified Financial Planner (CFP) and Certified Public Accountant (CPA) license
Salary
The average annual salary of FP&A analyst at the entry-level varies in the range of $50,000 to $80,000, which can go up in excess of $250,000 at the senior management positions such as Director / VP.
Source Link: https://corporatefinanceinstitute.com/resources/careers/map/corporate/fpa-analyst-career/
2. Financial Analyst
As a financial analyst, you will be responsible for analyzing the financial position of the organization.
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Responsibilities
The major responsibilities of a financial analyst include:
- Evaluating the company’s performance by analyzing its financial results and then compare it with the budget to check for variance
- Creating recommendations for senior management and executives
- Developing financial models for the purpose of planning, valuation or forecasting
- Providing support to the budgeting team for capital expenditure planning
- Reconciling all transactions by crosschecking both incoming and outgoing data
- Conducting various kinds of analysis and market research
Educational and Experience Requirement
The financial analyst should have the following educational and professional background:
- At least a bachelor’s degree in the field of accounting, economics, finance or other related disciplines
- Around 3 years of relevant experience, while 3 to 5 years of experience is preferred more
- Other preferable qualifications include Financial Modeling & Valuation Analyst (FMVA) certification or MBA
Salary
The median annual salary of a financial analysts is around $85,000, which can go up in excess of $167,000.
Source Link: https://www.bls.gov/ooh/business-and-financial/financial-analysts.htm#tab-5
3. Budget Analyst
As a budget analyst, you will be advising the organization preparing their financial budgets and organizing their finances.
Responsibilities
The major responsibilities of the budget analyst include:
- Helping project managers to develop a company-wide budget
- Ensuring that the company’s budget proposals are complete, accurate and in compliance with laws and regulations
- Helping in the consolidation of the company-wide budget by coordinating with all the departments
- Advocating and defending the requests for funds to the organization’s stakeholders
- Continuous monitoring of the organizational expenses to make sure that it is within the budget plans
- Updating the status of availability of funds to all the project managers
- Forecasting the budget requirements
Educational and Experience Requirement
The budget analyst should have the following educational and professional background:
- A bachelor’s in the field of finance, economics, accounting or statistics
- Other preferable qualifications include CPA or CFA certification or MBA
Salary
The median annual salary of the budget analysts is around $76,000, which can go up in excess of $116,000.
Source Link: https://www.bls.gov/ooh/business-and-financial/budget-analysts.htm#tab-5
4. Management Accountant
As a management accountant, you will be working very closely with the company’s senior management or the budgeting manager.
Responsibilities
The major responsibilities of the management accountant include:
- Recognizing the scope of improvement in the existing process
- Building a pool of personnel and resources for upcoming improvement projects
- Scrutinising current operational and financial data for recommending improvements
- Preparing reports with proposals for setting up new systems and procedures
- Discussing regarding the implementation of the proposed changes with management
Educational and Experience Requirement
The management accountant should have the following educational and professional background:
- A bachelor’s degree in the field of accounting, finance, economics or related discipline
- Other preferable qualifications include Certified Management Consultant (CMC)
Salary
The median salary for management analysts is around $83,000, which can go up in excess of $152,000.
Source Link: https://www.bls.gov/ooh/business-and-financial/management-analysts.htm#tab-5
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