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AAUP 2012: Friendly Budget Basics (R. Levy and S. Adams)
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AAUP 2012: Friendly Budget Basics (R. Levy and S. Adams)

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    AAUP 2012: Friendly Budget Basics (R. Levy and S. Adams) AAUP 2012: Friendly Budget Basics (R. Levy and S. Adams) Presentation Transcript

    • Friendly Budget Basics for Non-Financial Managers Rachel Levy, Business Manager, National Academies Press Sandy Adams, Director of Operations and Fulfillment, National Academies Press
    • Resource: AAUP Business Handbookhttp://aaupwiki.princeton.edu/index.php/The_AAUP_Business_Handbook
    • What do you want to know about budgeting?In the next 5 minutes, talk to your neighbors, grab a marker and write on the white sheets provided - budgeting terms or processes you don’t understand!This is your chance to ask thatquestion you did not want toask your finance officer ..butyou were always dying toknow?
    • What is a budget?• Detailed financial plan• Given time period• Revenue and Expenses• Often - Cash Flow• Often - Balance Sheet
    • Key glossary when building a book budget • List price, aka Retail price, Cover price • Discount/Sales Channel • Cost of book; • Cost of sales; aka cost of goods sold • Gross margin • Depreciation/amortization • Cash basis vs accrual basis • Full glossary on website
    • Two sides of a budget RevenueExpense
    • Where does Revenue come from?• Talk to your neighbors for 5 minutes• Develop a list of revenue sources• Then send a delegate to write on the boards
    • Sources of Revenue Book Sales Other Publishing Income Reprint rights, permissions, bookclub, translations Journals income Advertising Non Publishing income Subsidies from parent company Grants and contributions Rental income – space, parking, etc Gift shop Food concessions
    • How does revenue come in?• Per unit sold, varies with popularity of the book – Terms can vary – Returns can affect – Collections can affect• Flat fee up front – Sale of paperback rights• Annual amount from grant or parent
    • What kinds of expenses are there? Cost of Sales Operating Expenses Salaries and Benefits Editorial Expense Marketing Expense Production Expense Fulfillment Expense General Administration The Bottom Line
    • How do we pay for expenses? • Fixed – Weekly, monthly, quarterly – Salaries, Rent – Remitting taxes collected over multiple months – Deducted from sales revenue remitted • Variable – Advertising – Sales commissions
    • • Prepaid, then expensed over time – Balance sheet & Cash Flow • Prepaids • Receivables • Liabilities Examples • Computers • Author advances • Inventory • Design
    • What makes up Cost of Sales?• Talk to your neighbors for 5 minutes; develop a list of the items you would include as unique costs for a given title.• Then send a delegate to write on the boards
    • What goes into Cost of Sales? • Cost of book – Fixed – Variable • Other cost of sales – Inventory write- down – Royalties – Freight-in
    • Let’s walkthrough a budget!
    • Why do budgets get broken? • Timing/Phasing • “A pig in a snake” • Inaccurate initial forecasts • Mission Creep / Scope Creep • Poor revenue / expense tracking
    • How can you fix them? • Rolling averages for better comparisons • Re projecting mid-year • When overages are discovered curb spending when possible (variable costs) • Cutting fixed costs/making tough choices
    • Let’s see what you remembered?
    • ResourcesPowerpoint slides handoutGlossary of Terms handoutPresentation materials can be found, after 6/20/12 at:http://aaupwiki.princeton.edu/index.php/2012_Friendly_Budget_Basics_Contact Information for presenters Rachel Levy, rlevy@nas.edu Sandy Adams, sadams@nas.eduAAUP Businesss Handbook Linkhttp://aaupwiki.princeton.edu/index.php/The_AAUP_Business_Handboo