A Critical Review of Budget Control Strategies for Effective Financial Management in Organizations

Abstract

Aim: Budgeting is widely used to control organizational finances because it allows for better focus on resource management, costs, and goal alignment in terms of financial performance. This paper critically evaluates key budget control strategies such as zero-based budgeting, flexible budgeting, and rolling budgets, to assess their effectiveness in enhancing financial performance within organizations.

Methods: Using a narrative literature review approach, this study synthesizes insights from peer-reviewed financial management literature published between 2010 and 2023 to assess the advantages, challenges, and practical applications of each budgeting method.

Results: The review finds that zero-based budgeting promotes cost discipline by requiring justification for all expenses; however, it is often resource-intensive and time-consuming. Flexible budgeting enhances adaptability by allowing adjustments based on actual activity levels; however, it poses challenges in terms of forecasting accuracy. Rolling budgets support continuous planning and alignment with evolving business environments though it heavily depends on real-time data and robust technological infrastructure.

Conclusion: The study concludes that in a volatile economic environment, organizations must continuously evaluate and adapt their budgeting strategies. Agile methods such as rolling budgets, when integrated with predictive analytics and supported by stakeholder collaboration, can significantly improve financial control and strategic responsiveness.

Recommendation: It is recommended that financial managers adopt a hybrid budgeting framework tailored to their organizational context while prioritizing cross-functional involvement and data-driven decision-making.