Please explain the following paragraph and suggest whether it is true or false:
One of the reasons for having a shorter budget period rather than longer is that if the trend is negative, corrective action can be taken to counter the trend i.e. short term finance to cover expenses if there is a shortfall of cash
Some people/businesses prefer to run their budget over a short period (eg. 3 months or 6 months rather than 1 year or 3 years). They argue that keeping to this short term means that if the company has some budgeting difficulties something can be put in place to correct the downturn. For example, if there turns out to be a lack of readily available cash, so that expenses cannot be paid, then a short term loan can be arranged.
As I’m not a financial adviser I don’t feel I’m qualified enough to say whether that is the case or not.