Setting budget goals and objectives, Financial Management

Setting Budget Goals and Objectives:

Having collected and analysed all relevant information, and made general forecasts as to the key areas of concern / opportunity and special circumstances for the coming year, the next step is to establish goals and objectives which would then form the basis for the actual figures contained within the budget itself.

Leaving aside revenue goals for the minute (given the goal of this module is the understanding of cost controls), some expenditure goals may be:

  • Reduce salaries by 10%
  • Reduce advertising costs by 25%
  • Reduce stationery costs by 50%

Whatever the objective may be, budget goals must be clearly linked to the overall strategic plan of the business and reflect the broader business objectives as outlined in the strategic business plan.

When undertaking budget planning, the key is take those action plans identified and developed in the business plan, and convert them into actual numbers for inclusion in the budget.

A budget that isn't based on goals will not provide the impetus for staff to achieve the broader business objectives set by the organisation.

When setting goals and objectives it is imperative that those goals be achievable. Where budget goals are set too high with no possibility of them being achieved, staff may be demoralised or simply disregard the budget. To ensure credibility, budgets must be achievable.

The challenge for the manager is to set goals that challenge the department or organisation to achieve them.

Other examples of budgets may include:

  • Special marketing campaigns
  • Business expansion plans (increased staff)
  • Refit of existing premises
  • Vehicle fleet upgrades
  • Total business IT upgrades

It is likely that project teams will be allocated to oversee the planning phases of the project as well as implementation phases. In most cases it will be the responsibility of these teams to ensure that expenditure budgets attributed to the project are not exceeded, and report any discrepancies to management for inclusion (if necessary) in total business budget reviews.

Posted Date: 10/1/2012 4:17:48 AM | Location : United States







Related Discussions:- Setting budget goals and objectives, Assignment Help, Ask Question on Setting budget goals and objectives, Get Answer, Expert's Help, Setting budget goals and objectives Discussions

Write discussion on Setting budget goals and objectives
Your posts are moderated
Related Questions
As we know, zero-coupon bonds are issued without any periodic coupon payments. The investor gets the interest and the principal on a maturity date. The interest i

Roxanne invested $560,000 in a new business 7 years ago. The business was expected to bring in $8,000 each month for the next 26 years (in excess of all costs). The annual cost of

Clearing and Settlement The Treasury Bills are available in physical form if an investor desires so. The market is mostly dominated by institutional players who have a facility

Explain Speculator - Market Participants A speculator attempts to profit from a modification in the futures price. For doing this, the speculator will take a long or short posi

The securing of the working capital needed for the support of raises in accounts receivable and inventory related with an organizations initial expansion time.

Q. Merits of accept-reject criteria? Merits of ARR:- (i) Simple: - ARR method is very simple to understand and use. (ii) Complete life time of the project is considered:

Q. What goals should always motivate the actions of a firm's financial manager and why? Answer:   Please note that a minimum of 250 words is required on all responses to the d

Explain foreign equity ownership restrictions. Why do you think countries entail these restrictions? Several countries restrict the maximum fractional ownership of local organiza

Contingency Planning:   Once the events are evaluated and categorised, and the levels of risk attaching to them have established.  The organisation should then commence pla

Discount Pricing The T-bills are issued at a discount to face value and hence have no coupon. Commission rates on round lots generally range from $12.50 to $25.00 per $1 mil