General Reasons for Budget Shortfalls in an Organization

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Budget shortfalls can happen for a wide variety of different reasons in an organization. Learn about general reasons for budget shortfalls in an organization with help from a personal finance professional in this free video clip.

Part of the Video Series: Money Management
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Video Transcript

Hi, my name is Andrew Schrage, co-owner of the MoneyCrashers.com personal finance website, and today we're going to discuss common reasons for budget shortfalls in organizations. The two most reasons come down to revenues and expenses. On the revenue side, companies often will come up short of their projections, whether it was a one year, two year, five year projection, often these numbers will end up too high then where the company could realistically meet. So, when you're figuring out your projections for your revenues, you wanna account for unexpected circumstances, like a recession or competitors coming into the market and taking away some business. You need to account for all the possibilities, and you want to remain as conservative as possible when determining your revenue projections. On the expense side, equally you need to account for unexpected circumstances, whether it's increased manufacturing costs, or potential lawsuits. If you don't account for these things, you can end up with a cash flow crunch and budget shortfall, which can cripple an organization. When you are determining your budget, try to stay as conservative as possible, and account for as many unforeseen circumstances as you can. Once again, this is Andrew Schrage, co-owner of MoneyCrashers.com, discussing common reasons for budget shortfalls in an organization.

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