ABSTRACT
This chapter explains why financial planning is necessary in public services. It prepares a business plan containing a forecast cash flow, estimated profit or loss and a projected balance sheet. The chapter helps to understand what is meant by a budget, a capital budget, a revenue budget, a budget centre, a budget holder, budgetary control, incremental budgeting, zero-based budgeting, measures of performance and value for money. It explains the financial language which managers need to use, in order to discuss their plans with other people working in public services. In public services, managers often write reports that have financial implications. The chapter considers some of the effects of budgeting on human behaviour and in particular how budgets can be used to motivate people. It encourages to be proactive in one's use of budget reports and to take corrective action in good time to ensure that the final year end accounts reflect good stewardship of a public service.
