Effective Budgeting, Planning & Control

Introduction:

Budgets are an essential financial tool, which aid, planning, decision making, resource allocation, coordination, and control.

Without the necessary skills Budgets can be badly prepared and/or implemented leading to poor decisions, mid-use of vital resources, poor coordination, and a lack of control or even too much control resulting in missed opportunities.

Targeted Groups:

• Financial Managers
• Financial Planning and Control Staff
• Executives with Financial Responsibilities
• Executives who are responsible for the cost and strategic analysis
• Project Managers
• Employees who want to gain new knowledge to improve their career

Course Objectives:

At the end of this course the participants will be able to:

• Develop the skills to Plan Budgets within a sound Strategic Plan
• Develop the skills to Prepare Budgets using:
  • Appropriate Forecasting Techniques including Time Series Models,
  • Exponential Smoothing, Regression and Correlation Analysis and
  • Costing Methods such as Activity Based Costing
• Develop the skills to effectively implement Budgets
• Become aware of the problems/limitations of budgets and the conditions required for their success
• Integrate the budgeting process with the development of the company’s long-term strategic vision
• Identify key performance indicators for effective and focused decision making
• Perform “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and consumption
• Recommend various courses of action to manage the implications of “What If” and Sensitivity Analysis.
• Implement advanced planning and control techniques
• Develop the skills to effectively Manage & Control the budgeting process

Targeted Competencies:

• Integrating the planning process with the budgeting cycle
• Forecasting using various models including Time Series Models, Exponential
• Smoothing, Regression and Correlation Analysis using Excel and leading software/models
• Sales Budgets
• Production Budgets
• Cash Budgets
• Capital Budgets
• Budget Management including “What If, Sensitivity Analysis
• Budget Control including Variance Analysis to assess the impact on major factors of production and consumption

Course Content:

Unit 1: The Essentials of Budgeting:

• Strategic Planning, Forecasting, Budgeting, and Costing – Defined
• The inter-relationship of Strategic Planning, Forecasting, Budgets and Costing
• The Benefits & Limitations of Budgets and the Essential Features & Conditions Required
• An Evaluation of Various Types of Budgets:
  • Fixed
  • Variable
  • Zero Based
  • Activity-Based
  • Capital Budget
• The Essential Features of Activity-Based Budgeting
• Developing the ABB application model
• Budgeting for Processes rather than Departments
• Defining Key Cost Drivers
• Defining Key Activities
• Development of ABB Cost Standards
• Developing the Activity-Based Budget
• Preparing The Master Budget using Excel
• Sales Budgets
• Production Budgets
• Cash Budgets
• Capital Budgets
• The Master Budget

Unit 2: Forecasting Future Sales, Costs, Exchange Rates, Interest Rates:

• Determine the Purpose or Objective of Forecasting
• Methods of Forecasting using Qualitative and Quantitative/Statistical Analysis
• including the Exploratory Data Analysis Tools Available in Excel
  • Their Use & Limitations
  • Recognizing the Basic Patterns Inherent in Historical Data
  • Time Series Analysis
  • Exponential Smoothing
  • Correlation and Regression Analysis
• Presenting initial forecasts to decision-makers
• Forecasting future Market/Sector developments using Qualitative Analysis – SWOT Analysis and LEPESTE & Co Analysis
• Implementing Forecasts into the Budget
• Considering Hedging Strategies where variables such as Exchange Rates and Interest Rates cannot be forecast accurately
• Forwards, FRA’s, Futures, Options and Swaps

Unit 3: Preparing and Implementing Budgets Based on Forecasts:

• Preparing the Sales Budget
• Determining the price, credit policy, discount policy, and currency
• Preparing the Production Budget
• Preparing the Cash Budget
• Make finance and investment decisions
• Preparing Capital Budgets
• Use Excel to evaluate various Capital Projects using Present
• Value, Future Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Discounted Payback models
• An Introduction to “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and make strategic decisions
• Implementing Budgets Successfully
• The Conditions Required
• The Management Skills Required

Unit 4: Break Even Analysis, Sensitivity Analysis, and What-If Analysis:

• Break-Even Analysis, Cost Behaviour and Sensitivity Analysis
• Identifying Fixed, Variable and Semi-variable costs
• Identification of the level of sales/profit to break even
• Identification of critical costs
• Determining resources requirements
• What if Analysis using Excel and leading software
• Performing “What If” and Sensitivity Analysis to evaluate the implications of changes in major factors of production and consumption on the Cash Budget and Profit & Loss Account
• Identification of key performance indicators for effective and focused decision making
• Recommend various courses of action to manage the implications of “What If” and Sensitivity Analysis.
• Developing Budget Re-Projection and Best Case / Worst Case Scenario Models
• Planning for contingencies
• Developing various scenarios
• Using the Scenario tool in Excel® to explore the variable sets of assumptions while tracking the impact on the base model.
• Building the financial simulation model using probabilistic (Monte Carlo) simulation
• Building the financial simulation model using deterministic simulation

Unit 5: Variance Analysis, Reporting, Control, and Decision Making:

• Accounting Systems, Accountability and Responsibility Systems
• Essential Elements of a Costing System
• Establishing and Implementing a Costing System
• Undertaking Variance Analysis and Presenting a Variance Report to decision-makers
• Evaluation of the results
• Making Strategic Decisions based on the Variance Report/Business Planning