Effective Financial Planning, Forecasting and Budgeting


The budgeting process begins with zero-based budgeting, that is starting at zero and determining the needs of each department and tasks which can provide a far more accurate budget than just allowing for a simple incremental increase each year.

Budgeting also plays a critical role in strategic planning. As software and hardware needs become more sophisticated, annual budgeting is a must. Unless you plan ahead and include the costs of changes in your budget, you may find your organization going without the benefits of future advancements or expending significant amounts of money.

As many organizations have recognized over the past year, costs are certainly not a constant factor. Although it is not possible to predict fluctuations

Key Takeaways

  • Contribute effectively to the budgeting and forecasting of future plans of your department as well the organization
  • Learn the budget planning processes, preparation, review control and modern day tools for budgeting and variance analysis.
  • Discover and leverage on the different types of budgeting techniques that can be used in organizations.
  • Insights into defining the “uncertainties” that affect companies’ ability to produce accurate budgets, and quantify this with stress-testing, what-if and scenario analysis techniques.
  • Understand how to build budgets for the “real world”, allowing for flexibility and future change

Course outline

Budget and Forecast

  • Understanding the background of budgeting
  • Planning and budgeting an interactive process
  • The Planning Cycle
  • Budgets vs Forecasts
  • Behavioural Aspects
Case Study: Employee Run Budget Worksheet

Overview of Budgeting

  • Stages of Budgeting
  • Budgeting Process (Steps)
  • Zero based Budgeting
  • Static vs Flexible Budget
  • Product and period costs
  • Joint and process cost
Example: Statement of financial performance

Strategic Plan

  • Goals to Forecast
  • Impact of inflation & other economic indicators
  • Impact of Country’s policy / operating environment
  • Budgeting as a tool for controlling environment
  • Controlling the drivers involved

Master Budgets

  • Process flow of an organization
  • Operating Budgets
  • Merchandising Firm
  • Professional Services
  • Manufacturing Firm
  • Financial Statement Analysis
Case Study: Sales & Manufacturing Budget

 Analyzing the categories of Budget

  • Direct Material & Labor
  • Overhead & CAPEX
  • Cash reciept and disbursement
  • Procurement & Manpower planning
Case Study: Manpower Planning (can I afford another employee)

Cash Budgeting

  • Myth of “Profit“
  • Cash flow vs Profit
  • Managing Surplus
  • Operating, Investing & Financing Activities
  • Cash conversion cycle
  • Contingency provisions
  • Linking the Financial statements
  • Preparing Cash Flow Statement

Management of Cash and Credit Policy

  • Goal of Cash management
  • Ways to minimize Cash Holding
  • Elements of Credit Policy

Capital Budgeting

  • Incorporating capital investment decisions into the budget and planning process
  • Capital investment evaluation techniques
  • Importance of Cost of Capital
  • Net present value & IRR
  • What to rely NRV or IRR

Sample Budgets

Rolling Forecast vs Budget:

  • What is Rolling Forecasts
  • How to implement Rolling Forecasts
  • Actual vs Budget vs Rolling Forecast

Impact of Not Budgeting

  • Cash planning & working capital management
  • Impact on expense management
  • Revenue generation

Tools for Measurement

  • Responsibility Accounting
  • Variance Analysis
  • Bonus / Incentives / Target monitoring
  • Responsibility assignment

Statistical Budgeting and Control:

  • Phases of Strategic Planning
  • Linking budgets to business objectives and financial outcomes
  • Using ERP / Core application to monitor budgets
  • How to turn measurement into management