Budgeting & Planning

Budgeting success – effortlessly!

OLAP Office Explorer™, together with Microsoft Analysis Services (OLAP), provides the ideal platform for budgeting. Various approaches and techniques can be used by users.

Features include:

  • Bottom-up budgeting
  • Top-down budgeting
  • Allocations and spreading
  • Percentage changes
  • Spreadsheet modelling and uploading
  • Direct data capture and input for connected users
  • Data collection and upload techniques for disconnected users
  • Scenario management
  • Dynamic (automated) vs non-dynamic budgeting

OLAP Office Explorer™ provides the ideal platform for preparing a consolidated master budget for an entity. A consolidated master budget is the consolidation of all the individual budgets from the various operating units within an entity, including any foreign operations (refer to the Currencies and Consolidations areas).

Budgets form a basis for quantifying company plans. These include:

  • Operating plans relate to the production and investment objectives of the firm.
  • Administrative plans relate to the development and maintenance of the company’s structure.
  • Strategic plans deal with the long-term company objectives in relation to competitors, company growth and philosophy.

Reasons for Budgeting

  • Periodic Planning: The budgeting process creates a formal planning framework that provides specific deadlines for each phase of the planning process.
  • Co-ordinating Company Activities and Quantification of Objectives: The budgeting framework provides opportunities for the exchange of ideas amongst various company segments. Budgeting also helps management to quantify both the cost and benefits of different available alternatives. Costs and revenues of every product and department help to highlight potential problems.
  • Performance Evaluation: Budgets are estimates of future events and as such form the basis for evaluating performance.
  • Budgets help indicate to management what is expected of them. The comparison of actual results to original or flexed budgets helps to highlight potential problems.
  • Cost Awareness: Production managers, marketing managers and other managers tend to ignore costs and related benefits, as they are concerned with efficient production or innovative marketing techniques. Budgeting creates a cost awareness to managers with budget responsibilities and provides common ground for communication.
  • Goal Orientation: Budgets should reflect plans to achieve company goals as opposed to departmental goals, which are in conflict with overall company profitability. This problem is often highlighted by inter-departmental transfers of products or services.

Components of a Consolidated Master Budget could include: Operating Budget

  • Sales budget
  • Ending inventory budget
  • Production budget for direct material, direct labor and manufacturing overheads
  • Cost for goods sold budget
  • Administrative expenses budget
  • Marketing expense budget
  • Budgeted statement of income
  • Budgeted non-operating income
  • Budgeted net income
  • Budgeted currency income/loss

Financial Budget

  • Capital expenditure budget
  • Cash budget – shows the expected liquidity of the company
  • Budgeted balance sheet
  • Budgeted statement of changes in financial position

Zero-Based budgeting – To discuss this option, please contact OLAP Office™.

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