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Budgetary process ­
1. Judgements on likely sales
2. Set a likely amount of profit to be gained
3. Break the budget into
4. Then head of departments split it to
If one department overspends then the
budget will be lowered to balance out costs
Two reasons for budgets are to delegate
spending power and to monitor
Income budget is the target for revenue
To establish the budget the last years
budget figures are looked at
Zero budgeting is having no set budget but
instead asking for and explaining why you
want the money…read more

Slide 3

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Budgeting is for ­
1. No department spends more then expected, can
help the business operate efficiently
2. To provide a measurement tool, allowing
performance to be monitored
3. To make money available to people who know
how to spend it wisely on the department
4. Can be used to raise motivation levels within
When setting budgets managers need to relate
the budgets to the business objectives and
involve as many people in the process to help
people with the budgetary process
A budgetary variance is the difference between
the actual amount earned and the budget
Budgetary Variances are either Favourable or
Variance are calculated monthly so any
situations can be established and corrections
put in place…read more

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Cashflow Forecast
Cash flow is the money in and out the business
Cashflow forecasting is the flow of cash in a time
Revenue ­ is the income received by a business for
goods sold or services provided
Cash sale occur when sales are made and payment is
Total Revenue ­ all payments received within a time
Expenses ­ all money spent by a business in a time
Total expenses ­ total amount spent in a time period
Net Cash Flow ­ this is revenue take expenses
Closing balance ­ the amount at the end of the time
period…read more

Slide 5

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Cash Flow Forecast
Is made up of revenue, expenses, net
The figures are based on ­
1. past experience,
2. current and future financial trends,
3. knowledge of the manager/owner,
4. future plans of the business
Actual Cashflow can be different from the
forecast due to ­
1. sales not at the expected level(increased
competition/economic decline),
2. changing spending patterns of consumers,
3. Government influences,
4. Cost of raw materials,
5. interest rates change, so loans increase,
6. debtors pay late,
7. increased labour costs…read more

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Cash Flow Forecast
Cashflow should be monitored and
against the forecast as it will ­
1. allow action to be taken before a
crisis occurs,
2. experience is gained from
monitoring Cashflow and forecast
accuracy can be improved
Insufficient Cashflow can cause ­
1. suppliers pulling away and without
stock money will be lost,
2. banks will not remain confident
and refuse loans/overdrafts,
3. no available cash mean
opportunities cant be taken…read more

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Pete Attwood

Terrible, I can't even read it

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