Process and methods of Sales Budgeting

1. SALES
BUDGETING
BY ANIL KUMAR

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 Sales budget refers to the
estimation of the sales revenue
 sales overheads for a
particular period
DEFINITION

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PROCESS OF SALES
BUDGETING

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Step:- 1 - Decide a Period of Sales
Budget
 Sales budget can be planned
accurately if a specific period is
determined
 It can be made monthly, quarterly
or yearly

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Step:- 2 - Collect Previous Sales
Data
 Gathering the sales
data or record for the
previous period
 It acts as a base to plan
a sales budget for future
sales

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Step:- 3 - Gather Industry’s Sales
Information
 Company needs to be updated with the
total sales of the particular industry for a
specific period
 It should be aware of its market share
and the expected growth of the industry
within that period

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Step:- 4 - Compare Sales of Consecutive
Period
 After collecting the sales records a
comparative analysis is required of the
previous sales periods to predict the
future sales possibilities

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Step:- 5 - Study Current Market Trends
 Next step is keeping an eye on
the market fluctuations, preference
and trend which helps in
determining a more accurate sales
budget

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Step:- 6 - Communicate with
Customers
 The customer reviews and
buying habits should be
analyzed
 It helps to preparing a sales
budget

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Step:- 7 - Prepare Sales
Forecast
 Based on the above data and
analysis regarding past sales,
market trends and customer’s
response, sales for a particular
period is forecast

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Step:- 8 - Compare Actual Sales with
the Forecast
 Actual sales are compared with
estimated sales
 If considerable difference then
reasons are to be identified
 Corrective steps to be taken

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Step:- 9 - Factors Influencing Sales
Budget
 It is framed by different factors existing in the
business environment
1. Internal Factors ( production capacity,
promotion, seasonal fluctuations, price
fluctuations etc. )
2. External Factors ( govt. policies, competition in
market, technology development, economic
condition of country etc. )

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 It is the most common method of budgeting
 It is simple and easy to understand
 Incremental budgeting takes last year’s actual
figures and adds or subtracts
 Appropriate to use if the primary cost driver do
not change from year to year
Method:- 1 - Incremental Budgeting
Method

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 Activity-based budgeting is
a top-down budgeting
 Determines the amount of
inputs required to support the
targets or outputs set by the
company
Method:- 2 - Activity-based
Method

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 It is really a mindset about making sure that
everything that is included in the budget
delivers value for the business
 Value proposition budgeting aims to avoid
unnecessary expenditures
 It is not as precisely aimed at that goal as our
final budgeting option
Method:- 2 - Value Proposition Budgeting

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 One of the most commonly used budgeting
methods
 starts with the assumption that all department
budgets are zero and must be rebuilt from
scratch
 Zero-based budgeting is very tight, aiming to
avoid any and all expenditures that are not
considered absolutely essential to the
company’s successful (profitable) operation
 good to use when there is an urgent need for
cost containment
Method:- 4 - Zero-based Budgeting
Method

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