Budget Period
A budget period is a particular time frame during which budgets are planned, implemented, and evaluated by a business.
Updated: October 20, 2023
A budget period is a particular time frame during which budgets are planned, implemented, and evaluated by a business. It is based on the needs and preferences of the organization or individual creating the budget and can vary in length.
Budget intervals can be either short-term or long-term. A budget period is selected by organizations based on its operations, the level of information needed for financial planning, and the capability of accurately projecting revenue and expenses.
Demand planning software is used by many organizations to foresee the budgets needed to meet future demands. Financial plans and goals, such as anticipated expenses, income, and resource distribution to various divisions or activities, are set throughout a budget period. Financial performance is tracked by organizations during this period and modifications are made to stay on track.
Budgeting periods may vary based on the needs and circumstances of the organization. A time frame must be chosen by companies that aligns with their financial planning cycle and enables effective monitoring and control over resources. Annual budgets, Monthly budgets, Quarterly budgets, Rolling budgets, Zero-based budgeting and Multi-year budgets are few types of budgeting periods which are commonly used.
Goal setting, planning and resource allocation, performance monitoring, decision making, communication and accountability, stability and long-term planning are some more notable benefits offered by budgeting periods.
Types of budget periods
Fiscal Year: The most common budget period, aligning with the organization's financial year.
Calendar Year: Budgets that follow the standard January to December calendar.
Quarterly: Budgets divided into four periods, each covering three months.
Monthly: Budgets created for each month, offering detailed short-term planning.
Biannual: Budgets covering half of the fiscal year, often used for mid-year reviews.
Multi-Year: Long-term budgets spanning multiple fiscal years, providing strategic financial planning.
Rolling: Ongoing budgets that continuously update, typically with a fixed planning horizon.
Zero-Based: Budgets where every expense must be justified, starting from zero each period.
Project-Based: Budgets specific to individual projects or initiatives.
Performance-Based: Budgets tied to performance metrics and goals.
Fixed: Unchanging budgets for organizations with stable financial conditions.
Flexible: Budgets that adjust based on changes in business conditions.
