Setting & Controlling Budgets
Setting and Controlling Budgets
OBJECTIVES
- Plan and forecast at a business level.
- Distinguish between different cost systems.
- Develop an understanding of the corporate budgeting process.
- Read, understand and interpret master budgets.
- Prepare and monitor business performance and Identify cost savings.
- Appreciate the importance of reducing unnecessary costs and working towards increased corporate efficiency.
- Understand costs behavior more accurately
- Identify & manage key financial indicators for the business
- Be able to interpret the financial impact of strategic directions
- Understand the problems of overheads allocation and how Activity Based Analysis may aid decision-making and pricing strategies
- Understand capital budgeting
- Be able to perform and interpret variance analysis
WHO SHOULD ATTEND?
- Financial Planning and Control Staff involved in the performance of a business unit, division or an organization as whole
- Professionals with direct or indirect financial responsibilities
- Personnel who manage departments with budgetary plans, and who are responsible for cost and strategic analysis
- Professionals from all sectors of industry, but particularly those involved in manufacturing, production, engineering or sales
- Professionals who would benefit from having an opportunity to consider new ideas and methods in budgeting
COURSE OUTLINE
DAY 1
Strategic planning for Setting Budgets
- Understanding what strategic planning is and why it is important
- Clarify the difference between vision, mission statement, goals and objectives
- The outside environment: the need to understand the economic cycle
- SWOT and PESTEL analysis
- Tying the strategic plan to the budget
Financial Planning – Elements of Costing and Cost Strategies
- The nature and behavior of costs, fixed, variable, semi-variable, direct and indirect costs
- Standard and actual costing – the difference
- Understanding overheads
- Calculating the variances at a detailed level to give real meaning to them
- Activity base costing ABC
- Full cost pricing and managerial costing
DAY 2
Forecasting & Preparing the Business Estimates
- The purpose of forecasts for the business
- The limiting factors
- How to predict sale revenues – different approaches
- Percentage of sales forecasting
- Using the three financial statements for forecasting
- Break-even analysis
Forecasting methods
- The most useful forecasting techniques
- Quantitative approaches
- Qualitative approaches
- Forecasting methods demonstrated
DAY 3
Budgeting – The Corporate Budgeting Process
- Understanding the benefit of budgeting to an organization
- Budgets’ forms and purposes; the master budget
- The different types of budgets – fixed, flexible, zero based, & ABB
- Preparing, coordinating and monitoring a budget
- Should we budget for customer satisfaction?
Presenting a Business Budget
- Giving clear information
- Presenting the main variables
- Negotiating agreement
- Putting it clearly onto paper
- The budgets and performance measurement as tools for communications
- Budgets and issues of motivation
DAY 4
Tracking Expenditure for Performance
- Reconciling actual with budgeted expenditure
- Critical variances
- Material: Price vs. Quantity
- Mix vs. Yield
- Labour: Rate vs. Efficiency
- Identifying cost saving opportunities
- Looking for volume discounts
- Phasing expenditure to help cash flow
Capital Budgeting
- Capital budgeting overview
- Net Present Value
- Internal Rate of Return
- Modified Internal Rate of return
- Profitability Index
DAY 5
Controlling the budget variances
- Interpreting the variance analysis report
- What is critical & what is not
- Creating accountability
- Action planning – the essential next steps