An Operating Budget Solution to a Capital Budget Problem

Broadcast & media technology financing offers an operating budget solution to a capital budget problem. The capital budgeting process is often completed during the fall and in preparation for the coming year. Typically budgets are recycled "old news" and managers are squeezed to hold or reduce their department's new annual budget by some nominal percentage. The process breeds competition for the allocation of the capital budget "pie" and not all needs are perceived as equal. There may be a different interpretation over what is "critical" by different departments such as sales, marketing, engineering, production or finance. As a consequence of these conflicts rarely does anyone come away "happy" with the outcome of next years budgets. It forever seems that budgets under-capitalize some of the most reasonable or worthy projects in the name of "corporate treasury".

Enter the Operating Budget. The operating budget is designed to flow from the income statement, from the cash flow of the company and from the fluid nature of income, the way it occurs naturally in the broadcasters market with ad revenue occuring day to day, week to week, month to month. The Operating budget then allows a broadcaster to "spread the cost of technology to match the timing of revenues". And this is where financing comes in. Technology financing for broadcasters or anyone requiring broadcast, media, audio visual, digital production, display or sound technology is a means for the broadcast to match actual costs to revenues on a timed basis. It also creates a "hedge against inflation" because it allows for the payment of current costs with current revenues and future costs with future revenues.