This course will allow the participant to explore and share with other participant’s new thoughts in the planning, control, and budgeting cycle, resulting in a renewed energy in returning to the workplace and implementing a more focused budgeting process, which communicates useful and timely information to management.

You will learn how to

• Acquire best practices in budgeting
• Understand the strategic role of cost concepts
• Explain the costs concepts to the use of cost information for management control
• Describe the role of budgets in the management process
• Discuss the importance of strategy and its role in the master budget
• Prepare a master budget and explain the interrelationships among its supporting schedule
• Understand zero-base, activity based, and kaizen approaches to budgeting
• Explain the essence of control systems
• Develop flexible budgets for evaluating short-term financial performance
• Identify different cost control measures
• Measure and evaluate performance
• Leverage emerging technologies for delivering operational excellence

Course Outline

• Why actions often speak louder than words for successful businesses
• How a strategy is developed and how/why it continues to evolve
• Quantitative vs. Qualitative consideration

Laying the foundations for a successful business

• Mission and vision statements
• Strategies
• Objectives
• Goals

Principles of effective communication

• Identifying stakeholders
• Understanding their needs
• Talking their language

Developing and executing a strategy

• Development and analysis
  • Reviewing existing competencies
  • SWOT analysis
  • Porter’s Five Forces
  • PESTEL analysis
  • Ansoff’s matrix
  • Blue Ocean Strategy
• Execution
  • Right people, right time, right now
  • Total quality management
  • SMART implementation

Importance of business structure

• Business structure
• Physical structure
• Operational structure
• Responsibility structure
• Financial structure
• Cost models:
  • CVP analysis
  • Activity based costing
  • Activity based management
  • Value chain analysis

Budgeting

• “Best practice” quantitative budgeting
• The factors that govern the model structure
• The foundations of a budget model
• Why templates don’t work

Budget management
In today’s challenging business environment, cost management and cost reduction are keys to business
success.

• Managing costs
  • Understanding the drivers of cost
  • Variable vs. Fixed cost issues
  • Cost Volume Profit (CVP) and breakeven analysis
  • Activity based management and activity based costing principles
  • Value chain analysis
  • Non-financial costs: e.g. staff morale, customer loyalty
• Proactive
  • Cash discount/Price incentive schemes
  • Inventory management
  • Optimizing assets’ economic lives
  • Lease vs. Buy
  • Reducing controllable costs
  • Refinancing/Amending capital structure
• Reactive
  • Accounts payable teams
  • Credit collection agencies vs. Debt factoring
  • Supplier negotiations
  • Vertical integration/Partnerships

Cash flow and working capital management
Considering financing requirements

• Returns on capital
• Returns of capital
• Key concepts of financing:
  • Risk
  • Return
  • Ranking
• Analysis of results
• Accounting ratios

Further considerations

• The budget cycle
• Reasons for budgeting
• Types of budgets and budgeting methodologies
  • Zero based budgeting
  • Incremental
  • Top down
  • Bottom up
  • Top down and bottom up
• Budget risk
• Factors to consider in developing a budget
• Practical issues
  • Model bias – how to get stakeholder ownership
  • Methods of building model assumptions
  • Building a working analysis from history
  • Being able to update with actual data as it becomes available

Practical example: Developing a budgeting model

Variance analysis and forecasting in context
Improve your forecasting skills to turn historical data into future management information to assist your strategic planning, emphasising the importance of targeted variance analysis.

Risk-based budgeting and forecasting

• Why do we need a risk perspective in budgeting/forecasting?
• Risk factors affecting your budget/forecast
• Risk vs. Uncertainty
• Types of risk
  • Business
  • Operational
  • Financial
  • Enterprise
• Tools of the trade
• Alternative to point estimate modelling
  • Scenarios
  • Sensitivities
  • Simulations
• Key driver analysis
  • Creating a waterfall chart
  • Creating a tornado (sensitivity) chart
  • Deterministic vs. Probabilistic methodologies

Forecasting in context
Common methods of financial forecasting

• Create formula based data forecasts
• Regression analysis
• Bias and error estimation
• Scenario modelling
• Using PivotTables
• Using 1-D and 2-D data tables
• Using Scenario Manager
• Calculating and graphing moving averages
• Defining and solving problems: e.g. Goal Seek vs. Solver

Analysis and reporting
What do we do with budgeting/forecasting results? This session discusses the analytical and business skills for your work place and how you would manage the process strategically in practice.

Key outputs of a budget model

• Income statement vs. Cash flow
• Confirming key outputs
• Deriving key inputs
• Developing KPIs

Variance analysis

• Flexible budget variances
• Operational vs. Planning issues
• Key variances
  • Sales price
  • Sales volumes
  • Sales mix
  • Materials
  • Labour
  • Overheads
• Modelling variance analysis

Data analysis

• Using trend analysis
• How Goal Seek, Scenario Manager and Solver may help
• Revisiting risk: The role of scenario, sensitivity and simulations analyses
• Strategic options analysis
• Real options analysis
• Six Sigma
• Linear optimisation

Reporting and charting,Business planning

• The Dashboard Summary
• Chart examples
• How to plot trends and determine relationships
• Say it with charts: Using the right chart at the right time
• Implementing a strategic plan
• Developing the nuts and bolts
• Key elements of a business plan

Monitoring mechanisms to evaluate business performance

• Organisational structure
• Key outputs
• SMART measurements
• Key Performance Indicators (KPIs)
• Balanced scorecard
• Strategic, Tactical, Operational and Planning (STOP) budgets
• Post Implementation Reviews (PIRs)