Strategic Budgeting & Profit Planning

There is no denying that among all available management financing techniques budgetary control is probably the least misunderstood and the most misused. It is often poorly planned and implemented.

The wrong application of budgetary control could then lead to avoidance of the budget and manipulation of the budget finding.

Budgetary control needs to be introduced at the correct time in the correct way if it is to be effective. Efficient profit planning techniques can improve the overall management of any organization and companies that plan are definitely more successful than those that do not.

A new climate, with an emphasis on competitiveness, quality and flexibility, means organizations must rethink their approaches to:

• Inflexible budgets which are unable to reflect on-going sudden changes
• The external dimensions of customer needs in addition to internal aspects of cost management
• Decision making for “what if”

A special feature of this course is the opportunity to get sound advice on problems directly concerning your company. You will benefit too from the exchange of ideas and views with their managers who faced problems similar to yours.

Act Now to end your battles with finances – use your experience & knowledge to successfully plan & control your profits and budgets or to update an existing system.

Learning Outcomes:

• Evaluate proper budget guidelines & process
• Reflect on the best selection of forecasting techniques to reduce risk & uncertainty
• Learn about master budget & zero based budgeting
• The evaluation steps to the “high tech” solution to your budgeting process
• The human element in budgeting
• Confidently make decisions about budgets, finance and accounts
• Weigh up the advantages & disadvantages of different budgeting and financing techniques
• Maximize future growth potential with effective strategy formulation & “best practice” business budgeting and planning
• Understand the need for good budget construction & the basic techniques for budgetary control
• Explain the main financial statements & how they are used to monitor and control business performance
• Master the critical issues in profit planning

Who Must Attend:

• The staff who will be responsible for entering data into the budget system or training other how to enter information
• Those who want to gain control of the firm’s financial standing and obtain a firm grasp on the numbers side of their job
• General Accounting

Course Content:

• 1. Review & Control
• The planning process
• Setting the control mechanism
• Financial control performance criteria
• Setting up the budget committee
• Budget proposal, guidelines & assumptions
• Budget approval system, revision & adoption
• Timetable
• Implementation, administration & review of budget
• 2. Process, Budget Preparation & Control
• Planning process
• Administrating the budget
• Setting the control mechanism
• Financial control performance criteria
• Setting up the budget committee I department
• Budget proposal, guidelines and assumptions
• Timetable
• Approval system and revision
• 3. The Various Operating & Finance Budgets
• Sales Budget
• Production Budget
• Sales, Distribution & Administrative Expenses Budgets
• Working Capital Budget
• Finance Budgets (Capital Expenditure Budget & Long Term, Working Capital Budget)
• Budgeted Profit & Loss Account (master Budget)
• Budgeted Balance Sheet (master Budget)
• Case Study I – The formulation of the various budgets
• 4. Flexible Versus Fixed Budget
• Distortion caused by fixed budget due to cost behavior (fixed & variable cost)
• At varying activity level
• Example on distortion that arises due to changing output levels
• Advantages and disadvantages of using flexible budgets
• Cost behaviors – fixed and variable cost
• High and low method
• Regression analysis
• 5. Different Budgeting Concepts & Approaches
• Zero Base Budgeting
• Activity Base Budgeting.
• Kaizen Budgeting (applied in Toyota Motor Japan)
• 6. The Behavioral Aspect Of Budgeting
• The difficulty level
• Fairness to all departments and divisions
• Appropriate organization structure to support the implementation of budget
• Reward system
• The common reasons of failure of budgeting
• 7. Forecasting – Reducing Risk & Uncertainty
• Forecasting methods
• Qualitative approach
• Quantitative approach
• Selection of forecasting methods
• Forecasting cash flow
• 8. Master Budget
• Sales
• Operation & production
• Materials, labor and overheads
• Marketing & administrative expenses
• Budgeted income statement
• Budgeted balance sheet
• Other financial resource items
• 9. Zero Based Budgeting (ZBB)
• Priority budgeting for better resources allocation
• Identification of decision units
• The ranking system
• Documentation flow for ZBB
• 10. Capital Budgeting
• Factors to consider
• Types of decisions to make
• Methods used
• Capital budgeting process
• Risk uncertainty
• 11. High-tech Budgeting Process
• Types of software packs
• Use of spreadsheet in budgets and forecasting
• Factors to considers in evaluation of modeling software
• 12. Profit Planning
• Objectives of profit planning
• Return on investments
• Volume cost profit relationship
• Break-even and contribution margin analysis
• Financial modeling
• 13. Managers’ Performance
• Appraisal system for manager’s performance
• Responsibility centre
• Revenue centre
• Profit centre
• Investment centre

Course Methodology:

• A combination of class lectures, case studies or examples and group discussion. The course will be intensive but practical and highly interactive.
• There will be a question-and-answer session to allow participants enough time to seek answers to grey areas and to seek clarifications to any misconceptions or problems they may have regarding the subject concerned to the course. There will also be some indoor experiential activities to enhance learning.