This document discusses sales budgeting and provides steps for the sales budgeting process. It begins by defining a sales budget as the estimation of sales revenue and sales overheads for a given period, such as monthly, quarterly, or yearly. It then outlines 8 steps for preparing a sales budget, which include determining the budget period, collecting previous sales data, gathering industry sales information, comparing sales across periods, studying current market trends, communicating with customers, preparing sales forecasts, and comparing actual to forecasted sales. Finally, it discusses factors that influence the sales budget and different budgeting methods.

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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