Which of the following is a consequence of improper budget preparation?

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Budgeting is about ensuring projected revenues match planned expenditures so there’s cash to cover commitments. When budget preparation is improper, the cash flow forecast can be wrong, creating a shortfall that makes it difficult or impossible to meet obligations such as payroll, debt service, and payments to vendors. That risk of not having enough funds to cover what’s owed is the most direct consequence of a poorly prepared budget.

While misallocations can lead to inefficiencies and, in some cases, regulatory issues if procedures aren’t followed, none of those issues hits the core day-to-day requirement as immediately as being unable to pay essential obligations. Improved fundraising outcomes wouldn’t result from a flawed budget; typically the opposite occurs because stakeholders lose confidence when budgeting isn’t reliable.