Businesses often encounter financial difficulties as a result of either inadequate budgeting or errors within the compilation of the budgets. This Budget Prepartaion training course takes a practical approach to financial planning for the organisation and considers: the compilation of budgets; how to identify potential problems arising and suggests actions which can be taken. It also looks at ways of improving financial control using budgets, so as to avoid reduced profits and/or financial problems. It also provides opportunities for participants to apply the course content to practical examples.
By the end of this course delegates will be able to:
- Explain basic concepts and budget types
- Use costing and budgeting terminology in business
- Explain how to prepare a budget
- Set up a control system for a budget and budget to cost control
- Relate operating budgets to capital budgeting, identifyingcapital investment planningconsiderations that determine budget allocations, including risk, return, and the opportunity cost of capital.
- Analyse the advantages, disadvantages and limitations of different forecasting and budget preparation methods, comparingthe historical and incremental method with thepeer and market analysis, zero and priority based approaches.
- Analyse budget variances, list alternativereasons for them and decide when variances should be investigated or accepted.
- Explain how to updating and flex the budget
- Develop an effective and appropriate budget monitoring, control and reporting system for their division, department, or team.
- Appreciate the importance of coordination, participation, communication and motivation in the development and deployment of forecasting and budgetary systems.
- Explain the importance of a well-defined costing and budgeting process
- On an individual basis, identify particular areas requiring attention and develop consequential action plans for implementation in the workplace to improve performance
This programme is designed for anyone responsible for completing budgets for their departments, as well as those who are responsible for managing their company's budget process.
The seminar will be conducted along workshop principles with formal lectures, case studies and interactive worked examples. Relevant case studies will be provided to illustrate the application of each tool in an operations environment. Each learning point will be reinforced with practical exercises.
Setting the Scene
- Introductions and overview of participants’ existing knowledge and experience of financial planning and control
- Introduction to the course and its benefits for each participant
- Individual delegates’ objectives from the course
The Nature, Role & Purpose of Financial Planning & Control
- What is financial planning?
- The importance of budgeting
- What are its aims?
- How do we make budgets effective?
- The budget period
- Corporate objectives, long-term plans and budgetary plans
- Linking costing and budgeting to strategy and performance measurement
- Linking financial and operational issues
· Capital, revenue and cash distinctions
· How do these relate to the basics of a balance sheet, profit & loss account and cash flow statements
· Concept of accruals
Budgetary Planning & Control Processes
- The preparation of budgets
- Co-ordination: the budget committee
- Information: the budget manual
- Early identification of the principal budget factor
- The master budget: the iterative process of budgetary planning
- Constructing forecasts
- Limiting factors
- Sensitivity analysis
- Break-even analysis
- Elements of the budgeting framework
- Key concepts and terminology
- Advantages and disadvantages: critical issues to be discussed
- Overview of the financial statements
- Balance sheet, income statement, and the statement of cash flows
- Introducing cost analysis for decision-making
- Flexible and static budgets
Alternative Forecasting & Budgeting Methods
- Making investment decisions based on risk, return and the opportunity cost of capital
- Historical extrapolation and incremental budgeting
- Research based forecasting and zero-based budgeting
- How forecasts and budgets are developed in practice
Using Budgets for Control
- The budgetary planning and control cycle
- Developing and using budgetary control reports
- Producing and Using fixed budgets for planning and flexible budgets for control
- Fixed and variable costs
- Cost, volume, profit (CVP) relationships
- The key concept of contribution margin
- Direct and indirect cost – the allocation problem
- Traditional methods versus activity based costing
Behavioural Aspects of Financial Planning & Control
- Why defective budgetary systems often lead to staff dysfunctional behaviour
- Implementing a system that improves staff motivation, internal communication, participation, commitment and goal congruence.
Cost Measurement and Management
- Issues in Cost Determination: types of costs
- Overhead Recovery Costing
- Contribution Costing
- Improving Cost Management
Financial Decision Making
- Contribution Costing and its role in better decision making
- Relevant Costs in Decision Making: Incremental Cash Flow
- Capital Investment Appraisal
- Shortcomings of traditional approaches to budgeting and measurement
- Linking financial to operational issues
- Linking strategy to performance measurement
- Financial perspective
- Customer perspective
- Internal business process perspective
- Learning and growth perspective
- Develop Personal Action Plan