BDR and BDDS: Key Differences and Build Steps

The BDR (budget of income and expenses) is an important indicator of profitability and profit by which they analyze the financial success of a business, plan and prepare a budget for a certain period of time.

Company managers always pay attention to their gains and losses, strive to optimize them. The MDD compilation is an excellent tool for these tasks. So today we are going to take a closer look at the income and expense budget, and also touch on the topic of the difference between BDDS and BDR, as both reports are important for management activities.

Also Read: Stable and Safe Altcoins

How can companies resolve legal issues related to quarantine?

What is BDR: what role does it play in financial movement?

Let's examine the main components that should be included in this budget. It is worth mentioning that each company is individual, however, regardless of the ways in which the products are sold and the loss factors, they must be formed according to these categories.

1. costs… Indicators such as production costs, management costs, loan payments, if any, are taken into account.
2. Income. These indicators are considered as revenue from all goods or services sold and payments expected from organizations, other forms of cash flow.

Budgets like the BDR are becoming the most important aspect of a company's overall operations.… The development of the company depends on the financial component: the better the budget is prepared, the more precisely you will understand where the profit goes, what price you should put on the product and if it makes sense to manufacture it, if it is worth buying certain materials for products, it makes sense to use this technical equipment. Next, we will talk about another important budget – BDDS, and we will also find out the difference between BDR and BDDS.

BDDS: what is it and what is the difference from BDR?

The BDDS is a cash flow budget for a specific period, which takes into account all future cash receipts and, in general, cash flows for the object. It should be noted that only the company's financial resources are included in the BDDS.

The main difference between BDR and BDDS is as follows:

• the income and expense budget aims to forecast income;
• the cash flow budget aims at the rational distribution of financial flows in all phases of the company.

The formation of these company budgets (company, factory, etc.) solves many problems with accounting, helps to determine the relevance of goods, the expected profit and increases the efficiency of the use of monetary resources.

Since the reports make the company's management competent, we will pay attention to the indicators that make up these budgets.

Sketch BDR and BDDS

We will explain using the example of drawing up an income and expenses budget by which steps the report is formed.

1. costs This includes management, commercial and production costs; also, consider paying salaries and taxes (if you have additional costs, depending on the type of business, include them). Detail this indicator as much as possible.
2. Income… You need to take into account all financial resources received, that is, income from the sale of goods and services, compensation income and other payments that serve as assets of the company.
3. Profit. Based on the two metrics above, make up the difference. It can be positive or negative. The latter will mean that your business is operating negatively.
4. Revenue forecast. The main point at this stage is to collect data from past sales, compile statistics and predict the market situation, taking into account competitive prices, seasonality, relevance, etc. Your goal should be to get the most revenue with the least loss.
5. Formation of indicators in the form of a report… This is usually the work of specialists, their work with the budget aims to distribute all the indicators in the big picture and their analysis.

It is important to say that the budget of income and expenses, for example in the company, needs to be updated every month. This will allow you to better navigate finances and understand market profitability. Well, we're moving on to the steps of forming a cash flow budget.

1. Calculate the final balance of the enterprise. The ending balance is the balance of finances at the end of a specific period of time.
2. Next generation. This can be done in two ways: 1) from top to bottom; 2) ascendant… The first is that the financial service forms a BDDS, after which income and expense plans are transferred to the heads of different divisions of the company. The second works in reverse – the plans are formed by the heads of departments and, after their approval, are formed by a general document.
3. Expense formation. As with BDR, all company costs are considered here. Don't forget to detail them.
4. Calculate your Cash Flow (Net cash flow). What is BDDS without determining a company's financial status? It is the calculation of net cash flow that helps to evaluate investment options, understand growth prospects, etc. Formula Cash flow = CI (inflow) – CO (outflow).
5. BDDS approval.

BDDS and BDR have a simple decoding, at the same time, their contribution to the management activities of any kind of business can hardly be overestimated. With these two budgets, you can identify weaknesses, understand cash flows, predict company growth, attract investors with visual statistics, and much more. Use these tools and the result will not be long in coming!

Number of views: 12