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Budgeting & Forecasting › The Budgeting Process

What assumptions must be agreed before budgeting starts?

Intermediate

Answer

Common shared assumptions include inflation rates, wage increases, exchange rates, interest rates, growth/demand expectations, and pricing policy. Agreeing these centrally (often in the budget manual) ensures all departments budget on a consistent basis so the figures are comparable and can be consolidated meaningfully.
Real-world example The budget manual fixes a 3% inflation and 2% pay-rise assumption for all departments to use.

Common follow-ups: Why agree assumptions centrally? | Give examples of key assumptions.

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All 34 The Budgeting Process questions