CORPORATE FINANCE: ADVANTAGES AND DISADVANTAGES OF INTRODUCING A BUDGETING SYSTEM

Abstract

In today's unstable environment for the development of entrepreneurship, one of the strategically important areas for improving the activities of industrial enterprises is the introduction of financial planning and budgeting technologies. At the same time, the heads of enterprises are required to be able to properly organize external and internal work processes at the enterprise; build an effective financial structure that can regulate all the financial flows of the enterprise; form centers of financial responsibility capable of generating income and expenses of the company; and also to build a system of budgetary management for the structural divisions of the enterprise - responsibility centers. Budgeting, being part of the planning process, forms the basis for the activities of progressive companies and enterprises. However, in practice, budgeting has its advantages and disadvantages. The article reveals the content of the key concepts of the budgeting process; the classification of types of budgets is presented. The author presents an analysis of the centers of financial responsibility of the enterprise, in particular, reveals the composition of the cost center, the essence of the income center, the features of the marginal income center, the importance of the profit center, the strategic importance of the investment center. Conclusions are drawn about the key advantages and disadvantages of introducing a budgeting system into the financial and economic activities of an enterprise. It is concluded that it is necessary to introduce budgeting technologies.