Budgeting Methods and Procedures, Examples.
Budgeting is an important part of the financial management of an enterprise, which involves the allocation, use and monitoring of funds of the enterprise. This article will introduce the methods and steps of budgeting, and analyze them in conjunction with case studies.
I. Methods of Budgeting.
1.Incremental budgeting method.
The incremental budget method is a method of preparing the budget for the current year by making appropriate increases and decreases of various expenses on the basis of the previous year's budget and according to the current year's business ** and cost expenditure factors. This method is simple and easy, but it may be subjective and unreasonable.
2.Zero-based budgeting.
The zero-based budgeting approach is a zero-based budgeting approach that reassesses the need and amount of costs based on actual needs and expected levels of operations for the current year, regardless of the cost situation of previous periods. This method can overcome the shortcomings of the incremental budgeting method, but it is a large amount of work and requires a comprehensive analysis and evaluation of the various expenses of the enterprise.
3.Flexible budgeting.
The flexible budget method is a method of adjusting and revising the budget accordingly on the basis of the fixed budget and according to the change relationship between volume, cost and profit. This method can adapt to the expenses under different business volume levels, but it requires in-depth analysis and summary of the changes in various expenses of the enterprise.
II. Steps in Budgeting.
1.Define the objectives and principles of budgeting.
Before preparing a budget, enterprises need to clarify the goals and principles of budgeting, such as reducing costs and improving efficiency. At the same time, it is also necessary to formulate the overall plan of the budget, the indicator system and the allocation method.
2.Collect and analyze data.
Companies need to analyze historical data and market ** to understand the situation of various expenses and market trends. At the same time, it is also necessary to develop a reasonable business** and cost estimation method to ensure the accuracy and rationality of the budget.
3.Preparation of a draft budget.
Depending on the budget objectives and principles, companies can prepare a draft budget in different ways. In the process of preparation, it is necessary to fully consider the actual situation and future development needs of the enterprise, and make reasonable arrangements and allocation of various expenses.
4.Review and adjust the draft budget.
Enterprises need to review and adjust the draft budget to ensure that the budget is feasible and reasonable. In the audit process, it is necessary to conduct an in-depth analysis and evaluation of the necessity and reasonableness of various expenses, and adjust and correct the unreasonableness.
5.Approve and execute budgets.
The budget after review and adjustment needs to be submitted to the supervisor for approval. During the approval process, it is necessary to conduct a comprehensive review and evaluation of the overall plan, indicator system and allocation method of the budget. Once the budget is approved, companies need to strictly implement the budget plan and strengthen the monitoring and management of various expenses.
3. Case analysis.
A company is a production and sales of clothing enterprises, in order to improve the company's operating efficiency and market competitiveness, the company decided to use the zero-based budget method to prepare the next year's sales expense budget. The following is a specific case study:
1.Determine a budget target for selling expenses.
According to the company's development strategy and market environment analysis, the sales expense budget target for the next year is determined to be 20 million yuan. The target is determined based on a combination of factors such as the company's sales revenue, market share, and customer satisfaction.
2.Analyze historical data and markets**.
The company has conducted a detailed analysis of the sales expenses in the past three years, including the proportion of various expenses and growth trends. At the same time, an in-depth understanding and analysis of the market was carried out to determine the market sales and competition for the next year. Through the analysis, it is found that sales labor expenses and marketing expenses are the main components of sales expenses, accounting for 40% and 30% of sales expenses, respectively.
3.Preparation of a draft budget for selling expenses.
Based on the results of the sales expense target and the analysis of the historical data market**, the company uses the zero-based budgeting method to prepare the draft sales expense budget. In particular, the costs are reviewed and assessed on a case-by-case basis, and the need for and amount of each cost is redetermined. In the preparation process, the company also fully considered the next year's market sales** and competitive conditions and other factors to ensure the rationality and feasibility of the sales expense budget. The finalized draft budget is as follows:
Sales labor costs: 8 million yuan;Marketing expenses: 6 million yuan;Travel expenses: 1,000,000 RMB;Business entertainment expenses: 500,000 yuan;Other expenses: 1.5 million yuan. Total: 20 million yuan.