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Budget2012

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Basic principles of budget preparationb

Basic principles of budget preparationb

Published in: Economy & Finance

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  • 1. Budget process 2012
  • 2. Why we are here ?
    Not to discuss how it used to be, but how it would be!!!
    We need a Change !
    Just to be on one page on structure of budget process.
    To give you understanding of your participation into budget
  • 3. Reasons to have a budget in the company.
    Budget is a very useful tool to estimate financial needs
    Budget can help us to compare “What we would like to have” vs “What we actually have”
    Budget will help all of us to rise the company’s effectiveness
    Budget is for improving quality of management’s decisions
  • 4. Sad but true…
    or a couple of words on theory
  • 5. Center of financial responsibility (CFR)
    CFR – A division or unit of an organization for which a manager is held responsible.
    There are 3 different kinds of CFRs:
    Cost centre - a division or unit of an organization that is responsible for controlling costs.
    Profit centre - a division or unit of an organization that is responsible for achieving profit targets.
    Investment centre - a division or unit of an organization that is responsible for achieving an adequate return onthe capital invested in the division or unit.
  • 6. We are a management team
    Profit center
    Investment center
    Costs center
    Operations department; Purchases department;
    Central Lab , Existing stores
    Biz Development,New stores
    All departments
  • 7. Process of management
    Targets
    Planning
    Execution
    Control / regulation
    Motivation
  • 8. How it’s work
    Strategic drivers
    Management decisions
    • Operations decisions
    • 9. Budget expectation
    KPIs definitions
    Planning
    • Budget planning
    • 10. Budget approval
    Accounting
    - transactions booking
    Variance analysis
    • analysis of deviations
  • Key drivers
    Sales Budget;
    Planned quantity of stores;
    have to be done till the middle of the June
    Salary Max growth rate;
    Bonuses rate;
    Other costs Max growth rate;
    Changes in personnel (vacancies etc.);
    Otherstrategic targets
  • 11. Profit and Losses statement & Cash Flow
    P&L is a combination of 2 parts:
    P&L stores
    2. Other company costs and revenues
  • 12. Net sales own stores
    Operations dep,COO
    end of June
    P&L of store
    Direct material costs
    Operations dep, purchase dep,COO
    end of June
    Other direct material costs
    Central Lab
    end of June
    retail occupancy
    Operations dep, finance department, Legal dep,CEO,COO
    middle of July
    retail personnel salary
    Operations dep, COO
    middle of July
    advertising net
    Marketing dep, CEO
    middle of July
    other store expenses
    Operations dep,COO
    middle of July
    other operational costs
    CEO, finance dep
    middle of July
  • 13. Other company costs and revenues
    All administration departments
    Till the end of July
  • 14. Inventory
    Opening Balance
    + Purchases
    -
    Direct material costs (including plan for obsolescence provision)
    = Closing Balance
  • 15. CAPEX preparation
    CapEx & IA
    Till the end of July
    Office CapEx
    StoreCapEx
    Central Lab CapEx
    Central Lab
    IT-dep ((IT equipment, Software)
    Lab-technical department (medical equipment)
    Operations (repairs, low-value assets for existing stores)
    All administration departments
  • 16. P&L
    Structure of budget pack
    Deadline for Company is
    17.10.2011
    01.07.2011
    Cash Flow
    Balance Sheet
    Narrative paper
    Budget presentation
    17.10.2011
  • 17. Questions ?