Some internal and external stakeholders may be confused about the difference between budgeting and forecasting, you’re not alone. That said, both are critical to the financial wellness of your hospital or other healthcare facility, and require the utmost attention and care. Without combining your budgeting and forecasting, expenses such as staffing may be incorrectly allocated, which has the potential to impact the facility in the longer term, making it hard to predict funding and services for the communities you serve.
What is the difference between budgeting and forecasting
A budget is an annual, or perhaps quarterly plan for how a facility can serve its community today and in the future. It is a goal-based, and detailed representation of future results, financial positions and cash flows that the management hopes to achieve. A forecast, however, is the actual estimate of what will be financially achieved based on interval updates with real numbers. While the budget is goal-oriented, the forecast is what management will use to make decisions based on expenses and staffing and other short-term business decisions.
1. Keep it real
Creating a budget based on the best possible scenarios, does not take into consideration the impact of forecasting. By utilizing software that executes both budgeting and forecasting all in the same place and makes it incredibly easy to keep up-to-date, your facility will have a better idea of where you stand financially considering your goals.
2. Automatic rollups
The automatic rollups found in most budgeting and forecasting software is one of the best time saving features that makes updating your numbers monthly or quarterly rather painless. You won’t have to worry about hours of data entry to get everything into a master spreadsheet.
3. Facilitate comparisons
By keeping your budgeting and forecasting all within automated software, comparisons or “what if” scenarios between the ideal and the actual become easy, visualized and automatic. You can constantly keep track of where you are landing financially in contrast to your goals, which will free you up to make better decisions to get closer to your budget.
4. Keep the big picture in mind
It is just as easy to forget about the budget you set at the beginning of the year, as it is to forget about forecasting. By combining your budgeting and forecasting you can easily update your monthly numbers while keeping your annual budget goals at the top of your mind.
5. Give freedom to participate in budgeting and forecasting
Secure budgeting and forecasting software that provides workflows and approvals can give your management the freedom and responsibility of taking part in these financial practices. By giving them access to both the actual numbers and helping them stay engaged in the long-term goals, they will undoubtedly make better decisions, as well as keep all the fiscal responsibility from falling on one person’s shoulders.
Comprehensive software for managing both your budgeting and forecasting practices is one of the best investments you can make for your hospital or healthcare facility. With the right team in place you are sure to see a return in no time at all. Register for one of our free monthly webinars or set up a demonstration to found out more about how Questica Budget healthcare solutions can help you streamline your budget and performance process.