Budget preparation Process

1. BUDGETING
A management Tool
A quantitative economic plan in respect of a period
of time (2012) – Used by XYZ management to
manage the firms operation and finances.

2. Component
Revenue
Expenses
Cash
Capital
• (Based on Flexibility, Integration & Accountability)

3. Format Of Budget
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
A. Beginning Cash Balance
B. Cash Inflows (Income
Billings 2012
Fees collected
30 Days - (40%)
60 Days- (20%)
90 Days- (15%)
C. Cash Outflows
(Expenses
Expenses, Operation Cost,
Fixed & Variable
D. Other Cash Out Flows:
Capital Expenditure/
Drawings Financing
Costs
Ending Balance
(A+B) – (C+D)

4. Background 2011
@ XYZ

5. Where we are Currently 2012- Quarter 1…….
XYZ ADVOCATE QUARTER 1 BILLINGS AND COLLECTION- 2012
CONSOLIDATED ( M)
BRANCHES
QUARTE Quarter 1
Months/descri R 1 Actual Budget Variance
ption JAN FEB MAR
Billings 9.6 10.0 22.2 41.9 71.6 (29.9)
Collections 5.6 9.1 8.1 22.8 40.7 (22.6)
Income saved
from
disbursements .7 - - .7 - -
Total Income 6.2 6.1 6.1 18.5 40.7 (21.9)
Expenses 5.0 6.0 6.5 17.5 30.9 13.4

6. BENEFITS OF A BUDGET
1 • MAPPING.
2 • CONTROLLING.
3 • CO-COORDINATING..
4 • COMMUNICATING.
5 • INSTRUCTING.
6 • AUTHORISING
7 • MOTIVATING.
8 • PERFORMANCE MEASUREMENT.
9 • DECISION-MAKING.

7. Why we need budget & budgeting
@ XYZ
Help us identify risk & opportunity for the
following year

8. BUDGETING PROCESS- @XYZ
Objectives:
Mngt/hr/ac
Execution ct
Plan:
Assumption
KPI, KRI,
Roll up
Contingency
Strategy:-
:
Expand.
Back up
Sales/Pple
Plan
BUDGETING
Walk
forward /
Constraint:
Defense :
Competitio
Quantify
n, PB,
Risk%
Costs
Opportuniti
es
Methodology
Calculation:
Plan- Dev-
Sales, P&L,
Revw

9. BUDGETARY CYCLE
XYZ Budget Cycle
Budget Policy
Setting-Exe
Committee
Nov. 1st Week
Budget Review
(Every Quarter) Budget
Preparation
Exe.
Committee/Finance Nov 20th 2012
Budget Reporting Budget
and Monitoring Authorization
(Monthly for BMP) 18th Dec 2012
Budget
Implementation
Jan 6th 2013

10. Application of Budget
What are we currently doing?
i. Commitment vs. Compliance
i. Commitment to generates productive behavior without the
need for monitoring

11. XYZ, Budget Review Level
i. We Link the budget to performance appraisal
ii. We Bridge the gap Identified for flexibility
iii. Evaluate the degree of achievement every
month for consistency
iv. Apply needed remedy or compensating control
in line with HR Recommendation

12. BUDGET AS A MANAGEMENT
TOOL……..HOW?
a. If a branch/Unit meet the budget, no
significant deviation- Set New Target
b. Exceeds the budget, BMP-under-commit -
over-perform- Set New Strategies
c. Lags behind the budget, over-commit but
under-perform- Review Strategies

13. Presented by the Finance Manager: XYZ
Thank You
Milton-ochieng@hotmail.co.uk