Archive for category Financial
Key questions for preparing the sales budget
In this time of year so many of us are responsible to the sales budget for next year, we sat down to produce it without realizing how important it is and not just because we are going to measure against him, but because this is the fuel that drives the engine of decision making and that if not properly made, we are losing market opportunities.
The first problem we face is: what is the method we use to generate the budget and how accurate is it? But regardless of what will be the method, we should consider the following questions before developing to find out if we have solid foundations, so the information we deliver is best for the performance of the company.
1. Are explicit plans?
2. Do you accept the plans within the company?
3. The plans are flexible?
4. Are the plans and objectives consistent with internal and external constraints?
5. Plans are measurable?
6. Is expanding or reducing the level of activity of the company?
7. Has been evaluated consumer needs?
8. Who will be affected by future plans?
9. How can these people be affected?
10. employees fully understand the impact their work has cost?
11. Do the objectives are reasonably achievable budget targets?
12. Do you use the budget as a planning and operational control instead of using it as an inflexible instrument of dominance?
13. Do the budgetary control reports in addition to the reasons the results?
14. “budgets to motivate the people in the right direction?
After answering these questions we hope you have a clearer picture of where your budget goes.
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What is stagflation?
If any of you hear the news few weeks ago, it said the United States is going through a crisis caused by the “stagflation” and said what is that? So I gave myself the task of investigating and this is what I found.
Stagflation indicates the time or economic conditions that, in an inflationary situation there is a stagnation of the economy and the pace of inflation low.
This term was created in 1965 by Ian Mc Leod British Prime Minister who in a speech said “We now have the worst of both worlds: not just inflation on one side or stagnation on the other, we have something like stagflation.”
Stagflation is characterized by both higher prices, increased unemployment and economic stagnation, crises or even entering a recession. It is said that a recession when the national income declines for two consecutive quarters.
Stagflation is considered one of the worst possible economic scenarios for the difficulty of handling and correction, since monetary and fiscal policies that energize recessive economy worsen inflation and restrictive monetary policies that are used to combat inflation tend to deepen recession.
While recessions may have internal or external causes, stagflation is of domestic origin as the component of inflation is always a monetary phenomenon and domestic monetary policy in each country.
What is financial planning?
Planning is not just a business tool, but something that transcends what is operational and that has more to do with strategy. It is a balance between all levels of the enterprise, to respond in a more balanced and efficient manner to the challenges of its business base and the environment in which it lies.
Our focus is not to develop an organizational chart with clearly established hierarchies, but an operational structure based on their involvement with the strategy. Thus we have two types of areas:
1. Strategic Areas:
In this division we have two areas: Marketing and Finance. Marketing is responsible for developing and proposing strategic business alternatives, focusing on a marketing plan. Finance is responsible for quantifying the strategy or the alternatives proposed by marketing, so that would build up in Financial Planning. With this information the general direction would make a decision of “where the company should go,” and agree with this, make the company’s strategic plan.
2. Operating Areas:
This division is up production, logistics, sales, administration, etc.., which are responsible for policy in actions of the strategic plan.
The objective of any financial planning is to give the company a structure consistent with its business base, which is achieved by:
- Deployment in the company of a cost accounting system.
- The design of the financial statements that the company requires.
Good planning should allow quantifying the different strategic alternatives for marketing proposals, this will help us assess the impacts generated in the financial statements of the company.
The instruments are suitable planning:
- Strategic plan : it should detail the objectives, actions and resources needed for each variable of the marketing mix.
- Analytic Annual budget: it must project the company’s accounting result, compromise or quantitatively to all staff responsible and feeding cash budget accounting.
- The cash budget used to know in advance what will be the scenarios that will move the cash position of the company (payment policy, sales policy).
In the next installment we’ll continue talking about this useful tool in business.