What Is A Budget Analyst?
A budget analyst is a person who takes care of the financial resources and is responsible for their proper allocation to keep a balance in the budget. In short, they are the ones who keep the finances of a company on track by regularly checking the monetary factors used for various purposes ranging from manufacturing to marketing to even salaries and other miscellaneous expenses.
The analysts go through the budget proposals and review them before approval. Aware of the spending and allocation of finances, they tend to be the most suitable people to finalize the budgeting for any company and approve funding requests. Their understanding also helps in determining the allocation percentage for a particular department’s requirement for a financial year.
Table of contents
- A budget analyst is a professional data-oriented person who organizes and allocates various financial resources by monitoring each spending on an estimation basis.
- They need to have a vast knowledge of the entity’s operations.
- Their work is considered useless if they do not know the sector in which the entity operates.
- They must have comprehensive knowledge and consider many things before finalizing the work. Moreover, they are considered a supporting hand for the organization’s top managers.
How Does A Budget Analyst Work?
A budget analyst is responsible for carrying out one of the most important tasks of an organization – budgeting. Thus, from reviewing proposals to allocating resources, these professionals take care of every aspect of budgeting. As a result, they seem to involve in various budgets in the organization. However, the budget analyst’s duties might also remain confined to looking at the budget of a specific area as a financial analyst, production analyst, branch analyst, cash flow analyst, economist, financial planner, auditor, etc.
As financial budget analysts, they look for possible profits of the organization after deducting the expenses. In contrast, as production analysts for budget, they deal with the costs involved in producing finished goods.
They prepare a list of all the components required for production from the production manager of the organization. Then, they gather information about all the overheads in the production process to calculate the possible gross profitGross ProfitGross Profit shows the earnings of the business entity from its core business activity i.e. the profit of the company that is arrived after deducting all the direct expenses like raw material cost, labor cost, etc. from the direct income generated from the sale of its goods and services. from each product.
As analysts for branch budgets, they perform the same duties as they do as financial analysts. However, they remain confined to only one branch, not the whole organization. As cash flow analysts for a budget, the main job is to estimate the cash flows from the operationsCash Flows From The Organization's OperationalCash flow from Operations is the first of the three parts of the cash flow statement that shows the cash inflows and outflows from core operating business in an accounting year. Operating Activities includes cash received from Sales, cash expenses paid for direct costs as well as payment is done for funding working capital. and financial activities of an organization.
A budget analyst certification equips them to study the operational and other aspects of the business to understand its financial activities. Accordingly, they apply the strategies required for proper financial planning. On the other hand, as an auditor, check if the organizations maintain financial records properly.
Qualifications & Requirements
For proper budget analysis, a person needs to be a finance expert and easily do calculations. Therefore, they must satisfy the following criteria and have the required budget analyst certification to carry out their required tasks. Let us understand the qualifications and requirements through the discussion below.
- A bachelor’s degree in business, finance, psychology, mathematics, or social science.
- Analytical skills along with communication skills
- Must possess knowledge of accounting, economics, and statistics.
- Work experience with budgeting or finance gets preference.
- May go for the Association of Government Accountants (AGA)-sponsored Certified Government Financial Manager (CGFM) certification. This is mainly for the ones working with the federal, state, or local government.
The CGFM credential is the most recognized budget analyst certification, and candidates having the same must comply with the AGA’s Code of Ethics and clear an examination. They also have to complete a professional experience in governmental financial management for a specific period. The credential helps in career growth, boosting the salary of budget analysts.
The budget analyst evaluates budget proposals against compliance with regulations and reviews funding requests to approve or reject them accordingly. Based on the various budgets they prepare, the managers project the expected costs, revenues, and productions required. They also help managers to project the cost of hiring personnel. In addition, the budget by the analyst helps plan recruitment and labor training to reduce unwanted labor turnover.
Moreover, allocating financial resources helps them monitor expenditures and track unwanted expenses. Plus, these professionals conduct cost-benefit analyses to evaluate products and services. In addition, they assist in the speedy decision-making process for top managers and help save organizations from unavoidable shocks, providing unexpected cash outflows.
The analysts also help in the bifurcation of expenses as per various departments. This way, they identify the department to which the cost is related. However, they take effective measures to reduce the cost. They also segment costs into fixed costFixed CostFixed Cost refers to the cost or expense that is not affected by any decrease or increase in the number of units produced or sold over a short-term horizon. It is the type of cost which is not dependent on the business activity., variable cost, and semi-variable costsSemi-variable CostsFixed and variable costs combine to form semi-variable costs. Because semi variable costs are influenced by both fixed and variable costs, they are also referred to as mixed costs., which, in turn, helps the management decide the actual costs to focus on. With such a diverse scope of work, a budget analyst salary is usually on the higher end which helps the company to ensure no unnecessary expenditures are made.
Budget Analyst vs Financial Analyst
While business analysts may also perform the duties of financial analysts, the two roles differ widely in terms of skills, responsibilities, qualifications, workplace type, etc. So, let us have a quick look at the differences between the two:
|Day-to-day activities and requirements
|Governmental organizations and public accountability
|Industries focused on making more and more money
|Control spending or spend wisely
|Making fruitful investments
|At least a bachelor’s degree in accounting or finance is required
|Undergraduate degrees in technical fields or computers are preferred
Frequently Asked Questions (FAQs)
Government budget analysts monitor expenditure in sectors where every dollar counts and assure public accountability. They also work in healthcare, education, and financial institutions. In addition, financial analysts work in sectors where there is adequate revenue to support investments.
They examine financial information to determine how a business can use its funds most effectively and offer funding suggestions in light of their findings. Unlike other accountants who focus on taxes or valuations, budget analysts develop budgets and support businesses in sticking to them.
Budget analysts are expected to have a 7% increase in employment between 2016 and 2026, which is about average for all occupations. Therefore, budget analysts will continue to be in demand as long as there is a need for efficient use of public funds at the federal, state, and local levels.
This article is a guide to What is Budget Analyst. Here, we explain its qualifications, and responsibilities, and compare them with a financial analyst. You can learn more about financing from the following articles –