Financial Forecasting is the start of budgeting process. Elucidate.

A concrete financial plan is built on both forecasting and sound spending guidance. Financial forecasting and budgeting are two separate terms and cannot be used interchangeably. Financial forecasting is a critical first step in the budgeting process. Organizations work hard to create reliable financial forecasts which results in building realistic budgets. Financial forecasts should always precede the budgeting process to ensure spending is in line with factors that can impact overall financial performance. Budgets created without financial forecasts are at risk of: Overspending Lack of cash for unexpected costs Shortfalls in revenue Lacking a financial forecast may also keep the business from green lighting a new capital investment or launching a product that may have ended up being a growth driver.