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Gain the knowledge and confidence you need to build and manage budgets and forecast financial information.
This book demystifies budgets and forecasts, providing simple explanations and clear examples. It includes integrated checklists, goals and milestones, to ensure you are on target to achieve the best results.
Part of The Financial Times Essential Guides series: Task-focused and results-orientated, the essential guides are for every manager who wants to move their skills beyond the ordinary to the best.
About the author
Part 1 Preparing your budgets
1 What is the budget for?
The role of budgets – why do we have them?
1 Meeting the organisation’s objectives
3 Monitoring and controlling
5 Evaluating performance
6 Improving performance
7 Motivating managers
8 Management contract
10 Providing a basis for authorising expenditure and delegating responsibility
11 Identifying scarce resources
12 Allocating resources
13 Demonstrating and delivering good corporate governance
Linking budgets to strategy and policy
Budgets for special purposes
2 What is a forecast and how does it differ from a budget?
What is the difference between a budget and a forecast?
Benefits of forecasting ‘beyond the wall’
Forecasts, projects and contracts
Forecasting tools and techniques
Quantitative forecasting using Microsoft Excel
Useful Excel tools
Forecast frequency and automation
Measuring and improving forecast accuracy
Forecast financial statements
New product sales forecasting
Other factors to consider in sales forecasts
3 Essential background financial skills for budgeting
Cheaper is not always better: cost and value in budgeting
Accruals, cash and commitment accounting and budgeting
Understanding profit and loss account figures
Review of accruals accounting
Direct and indirect methods of producing cash flow accounting
The balance sheet
The master budget
Value analysis and value engineering
Activity based costing (ABC)
The breakeven model
Capital expenditure planning
4 How should the budget be built?
Zero based budgeting
Activity based budgeting
Should budgets be top-down or bottom-up?
Fixed v flexible budgets
External comparison driven budgets
VFM, outcome orientated and evidence based budgets
The power of evidence in protecting budgets
Good budgeting practice and ideas for constructing a budget
Setting budgets for contingencies
The challenge process
Building budgets and performance measurement
The budget game
5 How should cash be budgeted and controlled?
Planning systems and cash flow forecasting
Managing working capital – cash and risk
Managing trade debtors (accounts receivable)
Managing stock (inventory)
Managing trade creditors (accounts payable)
Cash flow in a business
6 How should capital expenditure be budgeted for?
What is capital expenditure?
The payback rule
NPV and DCF
Capital rationing: profitability index
Strategic fit and ‘roadmaps’
Long-term cash flow planning
Asset replacement and enhancement
Investment in working capital
Part 2 Managing your budget and delivering performance
7 Back to basics: living within your means and delivering VFM
Budget feedback mechanism
Ratios and budgets
The VFM model for managing and planning budgets
8 Making sense of standard costing and variances
Making sense of variances
Breakdown of variances
Practical variance analysis without standard costing
9 Risks, forecasts, balanced scorecards and KPIs
The balanced scorecard and strategy maps
KPIs and budgets
Values, mission and vision statements – and budgets
Risks and budgets
10 Delegating budgets to others
Devolved or delegated budgets
McGregor’s theory X and theory Y
The key to successful delegation
11 Beyond budgeting
Are budgets bad for business?
Implementing beyond budgeting
Achieving objectives obliquely – obliquity
Part 3 Reviewing your budgeting and forecasting performance
12 What lessons have you learned?
Take action and responsibility
Personal action plans
Templates to review your learning and construct an action plan
Beyond action plans: how do you know you have been successful?