What is the "budget cycle"?

The budget cycle refers to a comprehensive and iterative process that encompasses various stages essential for effective financial management. This cycle includes the phases of budget preparation, where the budget is drafted based on anticipated revenue and expenditures; budget approval, where the proposed budget is reviewed and authorized by relevant authorities; budget execution, which involves implementing the approved budget; and finally, budget evaluation, where the actual financial performance is assessed against the budgeted figures.

Choosing this sequence reflects an understanding that budgeting is not simply a single event, but an ongoing process that requires continuous monitoring, adjustments, and assessments to ensure organizational goals are met effectively. Each stage is dependent on the previous one, creating a cyclical flow that supports strategic financial planning and accountability. This comprehensive approach ensures that resources are allocated efficiently and that spending aligns with organizational priorities.