Preparing a Budget

Starting point – identify key factor restricting organisations growth such as sales, human resources, physical space. All other activities determined by constraining factor.

The Benefits of Budgets

Various potential benefits of budgets & budgeting such as: coordinating business and service operations plan ahead – often reveals need for action which may have been otherwise forgotten learn – effective budgeting systems contain feedback loops motivating managers budgetary targets focus attention Performance judged against targets – must be achievable, realistic, negotiated rather than imposed. If not, they can demotivate. […]

Process

Budgeting framework and standard costing framework are similar: plans set performance targets established outcome measures compared against targets corrective action taken if required Organisation should have corporate strategy, based on that: set of business/service strategies operational strategies business/service action plans Organisations within parts of public service which are not businesses or quasi-businesses. These set organisations’s long-term objectives and goals. Budgets […]

Target Setting

Important financial technique – setting goals & objectives. Managers use financial targets to monitor & assess success of financial control mechanisms. Typical targets deal with sales volumes & expenditure levels, achieved via budgeting techniques. Key principles around budgeting targets revolve around historical comparisons e.g. year-on-year. Able to determine operational trends and determine how to act upon them. Necessary to establish […]