An operating budget is one of the carefully crafted budgets that focuses on managing current expenses.
This differs from other types of budgeting strategies that may include provisions for future transactions or create additional expenses outside the scope of the basic budget.
The focus of the operating budget is to ensure that there are funds to keep the business operating and that these funds are distributed in the most cost-effective manner.
Almost all types of organizations depend on the operating budget.
Businesses of all sizes require this type of budget as a way of understanding how much income they need to continue operating at current levels.
Nonprofits must also work with an annual budget that reflects the number of projected donations and other revenue sources that will eventually be used to cover expenses necessary to the entity’s function.
Even families benefit from formulating a reasonable budget of this type because the process makes it easy to identify expenses and settle them when they become due each month.