Budgeting and financial forecasting are financial planning techniques that help a business
enterprise to achieve its desired levels of profits.
Budgeting uses estimation to quantify the desired levels of revenues, profits, and cash
flows that a business wants to achieve for a future period, whereas financial forecasting is
used to estimate the amount of revenues that will likely be achieved. Budgeting
essentially is a plan for where a business wants to go, whereas financial forecasting
indicates where the business is headed given the scenario.
Budgeting is essentially planning whereas forecasting is estimating based on the given
indicators. Hence, forecasting would indicate whether budgets will be achieved or not.