INTRODUCTION FOR BUDGETING AND COST MANAGEMENT ESSENTIALS
One of the common KPI (Key Performance Indicators) in any organization is effective budgeting setting and managing cost. World class organisations set the benchmark by preparing effective budgets that can weather any volatiles changes in business landscape. However, budgeting setting is viewed these days as a formal work exercise and taken lightly. With increasing pressure to manage costs, effective budget setting and process could enable accountability across all organisations.
COURSE OBJECTIVES
At the end of the program, participants will benefit from:
- Reviewing and differentiating the various Budgeting Principles and Financial Key Performance Indicators (KPIs)
- Implementing new techniques for a more flexible financial modelling environment that help provide a more accurate budget forecasting system
- Applying the new method of Collaborative Budgeting that will transform your organisation to be more responsive towards external business threats
- Adopting best practices in organisational culture that can help strengthen cost management strategies • Centralising financial information across all business units to increase transparency and accountability
COURSE CONTENT
Day 1
Session One: Distinguishing and Dissecting Key Financial Drivers for Stronger Divisional Performance •
· Reviewing the basic financial building blocks: – Income Statement – Balance Sheet – Cash Flow •
· Analysing the objective of the business: Is the budget in-line with the target of the shareholders? •
· Assessing the financial performance of the company: Effectively using key ratio measurements: – Return on Assets (ROA) – Return on Equity (ROE) – Return on Investment (ROI) •
· Identifying the business challenges and how better budgeting can help boost profitability Case Study Exercise: •
Case Studies Analysis
Is your budgets well equipped to deal with company issues?
Session Two: Steering the Company Towards a More Flexible Modelling Environment
• Linking budget development to the overall corporate strategy: Providing better coordination of tactics and understanding of corporate goals
• Developing and promoting a rolling forecasting system: Frequent updates of business projections for better month-to-month target: Value creation
• Increasing participation of various department in the budgeting and forecasting process
• Working hand-in-hand with trade associations that help spot industry trends and forecast potential happenings in areas such as demand, prices and labour Case Study Exercise:
• Putting your corporate strategy at the forefront of the budgeting process: Is this the way moving forward? • Delegates will prepare notes and put together a working template that will enable them to successfully implement the rolling forecasting system in their own organisation • Identify weaknesses in your company’s budget and suggest ways of improvement to optimise the accuracy and minimise potential deviations from the budget
Day 2
Session Three:
Differentiating the Best Tools and Methods for Budgeting and Forecasting •
• Deploying the use of SAP and Excel simultaneously to reduce data inaccuracies
• Evaluating the usefulness of the different budgeting methods: – Activity based budgeting and forecasting – Value based budgeting – Zero based budgeting – Target costing
• Adopting non-financial performance data using the balanced scorecard approach
• Detecting the common mistakes made during forecasting and the impact it can have towards the organisation
Case Study Exercise:
• Delegates are required to consider alternative methods of preparing budgets.
Session Four: Increasing Organisations’ Competitive Advantage through Cost Control and Cost Reduction Methods
• Utilising forecasting tools that can improve cost estimation: -Extrapolative methods – Explanatory variable methods – Simulation modelling methods – Composite methods
• Reducing the budget complexity and cycle time
• Accurately estimating different costing categories: Fixed, Variable and Semi-Variable
• Recognising seasonality trends in the business that can influence cost forecasting Case Study Exercise:
• You will be given cost data and related supporting information from which you will create forecasting models, standard costs/budget values as well as estimating the fixed and variable behavior of the costs •
• Uncovering business challenges in cost management and segregating them into fixed, variable and semi-variable categories
