Budget and Forecast are the primary things to consider by an organization if it wants to function properly. The function of both the terms might sound similar, but it’s not.
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Therefore, it is essential to rely on the forecast more than budgeting.
The forecasting allows you to see the actual conditions in which the company stands. Therefore, it makes it easier for you to take the necessary actions immediately.
In the budget, you can calculate the variance by comparing your estimation with the actual results. It is not possible to calculate the variance by comparing the result in the case of forecasting.
References
- https://onlinelibrary.wiley.com/doi/abs/10.1111/auar.12071
- https://cld.pt/dl/download/7de47e74-27f1-4dc1-a8f7-c8daa4fad7ee/Apontamentos%20NEG%20-%202%C2%BA%20ano%3B2nd%20year/English/Management%20Accounting/Group%20Work/Paper%205%20-%20Budgets_EAR.pdf