People sometimes confuse budgeting with accounting.

Accounting deals with recording, summarising, interpreting and reporting financial transactions.

Accounting asks questions such as:

• Did we make a profit?
• Where did we spend our money?
• What sales did we make?

Budgeting is mostly about predicting the future. Businesses need to look into the future and predict the financial consequences of business decisions.

Budgeting asks questions such as:

• Where will our income come from?
• What money will we need to expend?
• Will we have a viable business?

Notice the difference in these questions. The accounting questions are all past tense. The budgeting questions are all future tense.