Setting budget goals and objectives, Financial Management

Assignment Help:

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.


Related Discussions:- Setting budget goals and objectives

Debt securities, Fixed income security is a financial obligation of an ...

Fixed income security is a financial obligation of an entity, which promises to pay a pre-specified amount of money at per-specified date. Debt securities (

Evaluate the annual premium under this policy, Question: A 10-year defe...

Question: A 10-year deferred life assurance policy with variable benefits is issued to a select life aged 36. The policy provides the following benefits:- Sum assured is

What typ, how would you judge the potential profit of bajaj electronics on ...

how would you judge the potential profit of bajaj electronics on the first year of sales to booth plastics and give your views to increase the profit ?

How the net present value relate to the value of the firm, How does the net...

How does the net present value relate to the value of the firm? The net present value (NPV) is the dollar amount of the change to the value of the organization if the project wit

Types of firms in securities firms and investment banking, What are the typ...

What are the types of firms that securities firms and investment banking industry included? Into the USA, the securities firms and investment banking industry comprises several

Case lets, what type of financing is appropriate to each fim

what type of financing is appropriate to each fim

Hedging, how does "x" company hegde itself? the company name will be shared...

how does "x" company hegde itself? the company name will be shared later.

Non-interest rate indexes, Generally, an interest rate or an interest...

Generally, an interest rate or an interest rate index is used as a reference rate for However, through financial engineering, issuers have been able to construct

Explain the cash flow of the volatility, 1. Let's look at the cash flow of ...

1. Let's look at the cash flow of the volatility (variance) spread swap: - ( σ 2 Nasdaq - σ 2 S & P 500 ) N 2 It is noticeable from this expression that investor

Explain how bank eliminate the currency exposure, Banks find it essential t...

Banks find it essential to accommodate their client’s requirements to buy or sell foreign exchange forward, in many examples for hedging purposes.  How can the bank eliminate the c

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd