Help on Tele2, tariffs, questions

"Personnel Management", 2008, N 7

Adoption management decisions at modern enterprises it is impossible without the introduction of an effective budgeting system for financial and economic activities.

An effective budgeting system is one in which the planned forecast (calculation) has a deviation from the actual result by less than 5%. With this option, the costs are distributed more accurately and systematically, within the normal range.

Thus, budgeting is the process of building and executing the budget of an enterprise based on the budgets of individual departments.

The main purpose of budgeting is to coordinate all aspects of the enterprise. The problem is that more than half of the enterprises (70% in the periphery) have an inefficient budgeting system. Such a system of short-term planning is considered ineffective, in which the deviation of actual results from planned regularly exceeds 20 - 30%.

The current situation at the enterprises causes serious concern, since the company's budget is the basis for making managerial decisions.

As such, failure to meet the budget can mean the disruption of all company plans: production, sales, payments wages etc. The end result will be the failure to fulfill the main goal of the enterprise - the development strategy.

We can identify the main reasons leading to a decrease in the efficiency of the budgeting process:

Low organization of the process;

Imperfect methods;

Errors in planning in structural divisions;

Incorrect target settings;

Inefficient financial and economic system of the enterprise.

The basis of any activity is a written regulation, which clearly stipulates the rights and obligations of all departments participating in it, the forms and terms for submitting information, and the addressees of intermediate and resulting documents.

The mistake of the management of most enterprises is the assignment of budgeting to one person. In this situation, the so-called human factor may work - an employee may make a mistake, not take into account important income or expenses. The discussion and adoption of the budget at the enterprise should take place collectively, while the circle of persons should be strictly specified in the order on document management at the enterprise.

At the same time, it is very important not only for the budgeting process to determine and delineate the powers and responsibilities of individual services. The situation when the interests of the services intersect, and the powers are duplicated, rarely leads to positive results.

Equally important is the allocation of priority items of expenditure and consideration of the budget for future expenditures according to the significance of these items for the production and economic activities of the enterprise.

Based on the foregoing, we can highlight the main requirements for organizing the budgeting process for enterprises:

Well-established document flow;

Determination of the circle of persons responsible for the preparation, adoption and implementation of the budget;

Strict financial discipline;

Alignment of priority items of expenditure.

The most important thing is the understanding by the management of the enterprise of the importance and necessity of an effective budgeting system.

To determine the methodology for calculating the budget, you should first determine the strategy of the enterprise. The goals can be different: increase in revenue, profitability, liquidity, as well as the efficient use of working capital.

Building any long-term strategic model based on modern enterprise should begin with the development of a sales budget based on forecasts of its development.

It should be noted that if the calculations do not ensure the implementation of the enterprise's strategy, the expenditure and revenue items of the budget, the capital development plan, etc., should be reviewed.

Mandatory in the implementation of the budgeting process is the presence of three forms management accounting and planning:

Income and expenses;

movements Money;

managerial balance.

A significant mistake for most enterprises is the replacement of the management balance sheet with an accounting one. Only the analysis and forecasting of the three types of accounting will make it possible to transparently, accurately and fully reflect the processes taking place at the enterprise, and take prompt measures. Biased production planning is the most common mistake at the enterprises when drawing up the budget. Most importantly, this mistake makes all further budgeting work meaningless.

At the same time, 80% of cases of this error occur in production structural divisions. As a rule, planning in this area takes place according to the principle "as it was, so it will be", with a slight deviation towards increasing output.

In reality, the constantly changing demand of buyers, seasonality, changes in raw materials, the introduction of restrictions on imports, etc. are ignored.

For Russian companies, the difficulty arises due to the complete dependence on imported raw materials, and in fact, no manufacturer (especially in the agro-industrial complex) with the most advanced accounting and control system, with the most experienced staff for a period of more than a year.

The incorrectness of the targets lies primarily in the fact that at all enterprises the construction of short-term plans should be based on actually concluded contracts. In fact, budgeting for manufacturing enterprises calculated based on the directives of the management. With this approach, employees of the enterprise are forced to adjust the calculations to the strategic plans of the company. The bias of this approach guarantees a large deviation of the final result from the planned indicators.

This once again proves the need to start all budget calculations with the sales budget. Often, the entire financial and economic system of an enterprise reduces the likelihood of achieving planned targets.

At many manufacturing enterprises, the wage fund is formed as a certain percentage of the marketable output produced by the shop. This encourages workers to increase equipment utilization and increase output. At the same time, the gross output also includes the products that the shop manufactured and transferred to other shops according to full cost. The result of this approach is an increase in the cost of production.

This problem can be solved quite simply - to charge the wage fund based on the amount of final product produced, that is, to recalculate the wages of workers not in rubles, but in tons.

In general, in the end, the effectiveness of the budgeting process is determined by the efficiency of the enterprise as a whole. At the same time, the introduction and use of the budgeting and management accounting procedure very well helps to identify and classify many problems of the enterprise that could have remained in the shadows before.

To improve the budgeting system at enterprises, a number of measures are needed that can optimize these processes:

Set clear strategic goals and objectives for the personnel of the enterprise;

To debug the organization of the processes of generating reports and budgeting at the enterprise, streamlining the workflow;

To document the circle of persons responsible for the adoption and execution of the budget, strictly delimiting the rights and obligations between these persons and structural divisions.

Budgeting scheme for a meat processing plant

enterprise

┌─────────────┐

┌─────────────┤Sales budget├────────────────────────────

\│/ └──────┬──────┘ \│/

┌─────────┴────────┐ │ ┌─────────┴────────┐

│Variable costs│ │ │Fixed costs│

└─────────┬────────┘ \│/ └─────────┬────────┘

The most important tool for improving the results of the financial and economic activities of an enterprise is budgeting, which allows you to create a performance management system that can timely and adequately adapt to internal and external influences of factors affecting sales and production, improving product quality, developing equipment and technologies, etc. . The use of budgeting makes it possible to ensure the optimal values ​​of the interrelated budgetary parameters of the enterprise for the budget period according to the criterion of maximizing the final financial results, taking into account the emerging restrictions imposed by the normative (planned) values ​​of performance indicators.

For many Russian industrial enterprises the use of budgeting helps to improve the results of its financial and economic activities and increase the efficiency of management, production and marketing processes. It allows you to eliminate the reasons for the discrepancy between the planned budget and actual indicators. To do this, it is very important to choose the right budgeting methodology. In our opinion, the method of traditional budgeting proposed by V.E. Khrutsky. The budgeting process consists of the following blocks:

1. Operating budgets:

Sales budget: the volume of sales of goods, works, services; performance marketing activities; market conditions and capacities; price policy, prices for products of competitors, needs and preferences of consumers); production costs, etc.

Inventory budget finished products: stocks of finished products; standard stocks of finished products at the beginning and end of the billing period; ten-day (monthly) change in the level of stocks of finished products;

Production budget: assortment formation; production capabilities and capacities of the enterprise, a plan for changing stocks of finished products and a critical volume of production; calculation of optimal profit, costs and production volume; compliance of production and sales volumes in billing period and etc.

The budget for the cost of material resources: the budget for the purchase of raw materials, semi-finished products and materials; production stocks (semi-finished products, components, raw materials, materials, etc.;

Direct budget production costs: the cost plan is directly proportional to the volume of production.

Direct labor budget: labor costs of key production workers; the time spent by an employee on the production of a unit of output, etc.

Budget for general production (general) expenses: cost plan for auxiliary materials; to pay support workers; for the repair (modernization) of equipment of workshops (sections), depreciation production equipment, as well as other costs;

Cost budget for the sale of products: cost plan for the sale of products; cost plan for the production of a unit of sold products.

2. Financial budgets:

Budget of income and expenses: plan of income and expenses; formation, change and distribution of profits and profitability of certain areas of activity;

Forecast balance sheet: a plan for the ratio of assets and liabilities of the enterprise; budgeted balance sheet items.

To assess the quality of the budgeting (planning) system, the actual performance indicators are compared with the planned ones. If for all the parameters reflected in the budget there are deviations of the actual values ​​from the planned ones, then the budgeting system quality index - BI is used for evaluation, which is calculated according to the following formula:

where 𝐵fact𝑖 is the actual value of the 𝑖 -th budget indicator of income, expenses, assets, liabilities, cash flow; 𝐵plan𝑖 is the planned value of the 𝑖 -th budget indicator of income, expenses, assets, liabilities.

Particular attention deserves control over the execution of the budget, which, as a rule, is carried out on the basis of data on actual and planned values ​​of budget items and the calculation of deviations of actual values ​​from planned ones. To assess the compliance of the budgeting process with the conditions (factors) of the external and internal environment of the enterprise, the method is used expert assessments, providing for a quantitative assessment of the effectiveness of the functioning of the budgeting (planning) system. To do this, the indicator (coefficient) of the adequacy (adaptation) of the budgeting system is calculated - 𝐾𝑎d𝑐b. The coefficient of adequacy (adaptability) of the budgeting (planning) system can be represented as an average quantitative assessment of the adequacy of planning operating budgets:

where 𝑃ф𝑖 is the actual assessment of the planning of the 𝑖 -th operating budget in points, given by one expert; 𝐴 - the maximum allowable budget estimate in points (𝐴=10); 𝑁 - number of experts; 𝐾𝑎d𝑜b𝑖 - coefficient of adequacy of the formation of the 𝑖 -th operating budget.

From formula 2 it can be seen that the coefficient 𝐾𝑎d𝑐b characterizes the degree of compliance (adaptation) of the developed budgets (plans) with real conditions (opportunities) external environment, and individual operating budgets (plans) to the overall strategic plan of the enterprise.

At the final stage, to assess the effectiveness of budgeting as a tool operational management the enterprise needs to calculate the integral indicator (coefficient) of efficiency, which is defined as the sum of their values ​​in points. To do this, each indicator is assigned a certain weight (point). Depending on the value of each of the indicated coefficients, the estimated indicator belongs to one of the groups, each of which is assigned a certain number of points. In our opinion, the weight values ​​of each of the indicators can be estimated by the following number of points (Table 1).

Table 1

Groups and weights of indicators for assessing the effectiveness of budgeting

The integral indicator for evaluating the effectiveness of budgeting is calculated using the following formula:

where B𝑗 - score 𝑗 - that indicator of assessing the effectiveness of budgeting; 𝐵𝑗 - weight 𝑗 - of that indicator for evaluating the effectiveness of budgeting. Using the methodology of V.E. Khrutsky, we can conclude that it is complex, has a wide scope various kinds budgets. It proposes a division budget forms on operating and financial budgets; formulas for calculating the budgeting system quality index, the budgeting system adequacy ratio and the integral indicator for assessing the effectiveness of budgeting are given.

However, it should be noted that it has some drawbacks: it does not evaluate the effectiveness of the implementation of the cash flow budget; there is excessive detailing of budget items, which makes it difficult to assess the effectiveness of budgeting.

The goals of introducing budgeting as a tool for the operational management of an enterprise are not limited to increasing the efficiency of using the assets available to the enterprise. Budgeting can be aimed at increasing labor productivity; validity of planning financial resources, first of all, investments in certain areas of diversification of production at the enterprise, substantiation of managerial decisions; increasing the transparency of the reports provided in the operational accounting system and, ultimately, reducing the cost of manufacturing the enterprise's products.

Bibliography

1. Razinkov, P.I. Economic condition and competitiveness of the enterprise. Methods of analysis and indicators of evaluation / P.I. Razinkov, O.P. Razinkov. Tver, TVGTU Publishing House. 2013.

2. Razinkov, P.I. Problems of improving management at the enterprise in an unstable market / P.I. Razinkov, Collection scientific papers Faculty of Management and Social Communications, TvGTU, Tver: TvGTU Publishing House. 2015.

3. Khrutsky, V.E. Intra-company budgeting [text] / V.E. Khrutsky, V.V. Gamayunov. - 2nd ed., revised. and additional - M.: Finance and statistics, 2010. - 464 p.

Budgetary control is a comparison of actual indicators of financial and economic activity with planned (budget) ones to check their consistency in size and timing, as well as an analysis of the causes of deviations in order to develop proposals for adjusting budgets or financial and economic activities of the enterprise.

Budget control is an effective tool to stimulate increased financial responsibility and productivity as individual workers, responsibility centers, structural divisions and the enterprise as a whole.

To control the implementation of budgets, as a rule, a two-level control system is used. The lower level is control over the implementation of partial (functional) budgets of the structural divisions of the enterprise, directly carried out by the economic services of these divisions; at the same time, both individual indicators of the consolidated budget and its components, i.e. functional budgets, are controlled. The upper level is control over the implementation of the budgets of all structural subsections, responsibility centers and consolidated budgets for the enterprise as a whole, carried out directly by controlling services. Financial management / Ed. G. B. Poliak. - M.: Finance, UNITI, 2002, C. 238

The main elements of the control system include:

Objects of control -- the budgets of structural units, private (functional) and consolidated budgets;

Subjects of control-- individual indicators of costs and revenues, receipts and expenditures (observance of the liquidity budget, payment for work, costs of raw materials and materials);

Subjects of control - controlling services that monitor compliance with budgets and departments or individual employees who are responsible for budget implementation;

Budget control tools -- methods, procedures that are used in the process of budget control.

The activities of the controller in the field of budget control include such activities as:

Identification of actual data;

Calculation of deviations;

Determining the causes and factors of deviations;

Development (selection) of a number of measures to correct plans and activities in general;

Evaluation of proposed activities;

Initiation of decisions regarding the correction of plans;

Monitoring the implementation of adjusted plans.

Proper budgetary control is possible only if all transactions related to cash receipts and payments, income and expenses are taken into account, and the classification and methods for determining individual indicators should be standardized both during planning and during accounting. Identification of actual indicators and determination of deviations is carried out on the basis of data from management and operational accounting, which are a kind of continuation and detailing of financial accounting.

Calculation and analysis of deviations of actual indicators from budget ones can be carried out both in absolute and relative terms. It is carried out in the context of individual periods and cumulatively, that is, taking into account a certain set of reporting periods. Deviations revealed in the process of control signal the need to correct plans for financial and economic activities.

Specific recommendations for correcting plans should be formed only after a thorough factorial analysis of the causes of deviations and their interpretation, which is the most difficult element of budgetary control. The reasons for deviations are recommended to be systematized in the context of three functional levels:

1. Level of planning:

Erroneous assessment of the development of the external environment;

Incorrect predictions about the cause-and-effect relationships between the activities of the enterprise and external factors influence;

Deficiencies in information support or information processing that led to unrealistic predictions.

2. Decision level:

Acceptance of erroneous planning alternatives built on incorrect proposals in advance;

Approvals of planned alternatives other than those that, according to the justifications, are more realistic to implement.

3. Implementation level:

Deficiencies in the qualitative and quantitative provision of material, financial and labor resources, which led to the failure to achieve planned targets;

Deficiencies in the production process;

Weaknesses in the organization of production and economic activities;

Insufficient motivation to fulfill planned targets.

By general rule in the process of analyzing deviations, the indicators are interpreted in the context of their impact on the financial results and liquidity (solvency) of the enterprise. For the most part carried out in practice factor analysis deviations of actual financial results from the budget ones. The purpose of the analysis is to identify and evaluate all the factors that caused deviations and, on this basis, develop conclusions and proposals regarding overcoming the identified negative factors and weaknesses, using possible reserves and appropriate correction of plans. Particular attention is paid to the analysis of profits from operating activities and costs, which can be carried out in the context of individual structural units, types of products. Through budgeting to effective management// Financial management. - 2008. - No. 1.

Analysis of deviations of actual profit from budget indicators is carried out, as a rule, for such factors as:

Impact of changes in sales volumes; the impact of price changes;

The impact of changes in the range of products sold;

The impact of changes in the value of costs.

The impact of changing the value of costs in the analysis process includes separate groups:

Fixed and variable costs;

The cost of raw materials and materials;

Personnel costs.

Analysis of deviations of actual indicators from the budget is considered the main tool for assessing the activities of responsibility centers or costs (profitability). However, it has two main disadvantages:

Only internal ratios between planned and actual indicators are taken into account, since the basis for comparison is the results of the activities of one enterprise; the lack of comparison with the performance indicators of other enterprises predetermines the danger of subjective interpretation of the results of the analysis and erroneous conclusions;

Differences between the period in which the deviations occurred and the periods with which the analysis is carried out and the corresponding reaction to the deviation is carried out.

It is expedient to draw up the results of budgetary control in the form of a report on the implementation of budgets. The analysis of deviations is visualized in the form of diagrams, graphs, drawings. In the reports, next to the fixation of deviations, their reasons are explained and proposals are formulated for adjusting budgets or improving financial and economic activities. Reporting analytical materials on the implementation of the consolidated and functional budgets are submitted to the management of the enterprise for the prompt correction of the consolidated budget of the enterprise and the budgets of structural subdivisions or responsibility centers. The results of the analysis of the implementation of budgets, relative indicators and coefficients may necessitate the development of a new version of the budget, which should begin with the selection of target values.

At large enterprises, as a rule, complex automated systems of budget planning and control (for example: ERP system, Comshare, MPC) operate. This allows you to receive information on the implementation of budgets as quickly as possible (daily, ten days, monthly) and, accordingly, make the necessary adjustments to them in order to increase the efficiency of operational financial management of the enterprise. Essential in planning with automated system consists, firstly, in the ability to model different scenarios for constructing a consolidated budget according to its various parameters, and secondly, to apply interactive tools for analyzing deviations, which make it possible to “decipher” individual indicators and reach conclusions regarding the factors that affect them. Kovalev V.V. Introduction to financial management. - M.: Finance and statistics - 2001, C. 203

Budgeting begins with the development of a consolidated budget, that is, a plan of production and financial operations that make up an enterprise activity plan for the budget period. The budget does not have a standardized form (unlike the accounting and financial reporting). The budget should present information in an accessible and clear way so that its content is understandable to the user. The budget may not contain data on income and costs at the same time, there is no need for them to be balanced. For example, in the materials procurement budget, information is provided only on the planned costs of raw materials and semi-finished products. The structure of the budget depends on the object of planning, the size of the organization and the degree of qualification of the developers. Detailed sections of the budget are added up for one year, broken down into quarters, months, decades, weeks or days.

The main steps in the master budgeting process are:

Consideration current program, which includes general plans, directions and policies, proposals and constraints used in the preparation of budget estimates;

Preparation of the sales budget;

Preparation of other budgets by managers of responsibility centers for supporting (but not dominating) the personnel of the budget department of the enterprise;

Negotiations on the coordination of the main budget between the managers of responsibility centers and the heads of the enterprise, as a result of which obligations arise between them;

Coordination and adjustment as initial budgets move up the enterprise management system;

Approval by senior management and the board of directors of the core budget;

The composition of the elements of the consolidated budget, especially its operating part, largely depends on the type of activity of the organization.

The consolidated budget is the financial, quantified expression of marketing and production plans necessary to achieve the goals of the enterprise and, which allows, to a certain extent, to increase the stability of the organization.

According to experts, due to the fact that enterprises do not form annual budgets, they lose up to 20% of their income per year. In order to avoid these losses, it is necessary to constantly compare the budget with actual data, analyze deviations, strengthen favorable and reduce unfavorable trends, and improve planning methodology.

The consolidated budget is divided into financial, operating and investment budgets.

Sales budget - plan for product range and sales volume of each stock item and is the starting point for the development of all the following operating budgets. Developed by senior management based on research from the marketing department.

Sales volume and commodity structure determine the level and general nature of the enterprise. The development of a sales budget is the most difficult stage in the budgeting process, since the volume of sales and revenue from them are determined not so much production capabilities enterprises, how many marketing opportunities for real market that is subject to the influence of uncontrollable factors, often with much of the uncertainty.

Factors that affect the sales forecast:

Sales volume of previous periods;

Productive capacity;

The dependence of sales on general economic indicators, the level of employment, prices, the level of personal income;

Product profitability;

Pricing policy, product quality;

Competition;

Seasonal fluctuations.

There are two main estimation methods that underlie the development of a sales budget:

Statistical forecast based on mathematical analysis of general economic conditions, market conditions, growth curve;

Expert opinion obtained by collecting the thoughts of managers and employees of the sales department.

The production budget is a production program, the initial information for the development of which is the planned sales volume and the amount of stocks. The production budget determines the volume of production for the sales budget and to maintain the inventory of finished goods at the level planned by management. Compiled in kind:

production budget = BP + PZGPk - PZGPn

Where: BP - sales budget; ПЗГПн - forecast stock of finished products at the beginning of the period; PZ GPK - forecasted stock of finished products at the end of the period

To determine the total cost of production, it is necessary to calculate the unit cost of production, which consists of the cost of materials, labor and overhead costs.

The next stage in the development of a consolidated budget is the preparation of a budget for the cost of materials, a budget for labor costs, and a budget for overhead costs. To develop a budget for the cost of materials and a budget for the purchase of materials, the initial information is the level of stocks of materials at the beginning and end of the planned period:

Number of materials = Mpl - ZM n;

Where: Mpl - materials necessary for the production of the planned volume of products; ZM n - stocks of materials at the beginning of the period.

The budget for the purchase of materials = (Mp + ZMk - ZMn) x Tsm.

Where Mn - the need for materials for production; ZM k and ZM n - stocks of materials at the end and beginning of the period, respectively; Cm - the price of materials by type.

The costs of work depend on the type and quantity of products produced, its labor intensity, and the wage system. Based on this information, a labor budget is formed.

All current budgets are closely interconnected. Sales forecasting is the first step in the budgeting process. The sales forecast determines the production budget, on the basis of which the budget for the purchase of materials, budgets for labor costs and general production costs are developed. Zell A. Business plan: investments and financing. - M.: Os-89-2001, C. 60 Relationship general budget and budget funds are shown in Table. 1.1

Table 1.1

The relationship between the main budget and the budget funds

Based on these elements of the budget, the effectiveness of the entire budget system enterprises in general.

When establishing such a system for evaluating the performance of the budgeting department, it is important to make sure that the department has real authority to influence the marked indicators. Additionally, it is worth evaluating what forces achieve such a result of work - how many employees are in the current composition of the department, how many are required to effectively complete the tasks (for more details, see).

If the company has not previously assessed the work of its employees according to rigidly set indicators, then at the initial stage it makes sense to introduce softer requirements - that is, to introduce acceptable performance parameters to the target performance parameters. For example, set the target level of operating expenses at 30 percent of sales, and set the threshold for recognizing the performance of the department as 35 percent. First, it will help employees move to new system evaluate their work and gain experience in monitoring set parameters. Secondly, the financial director will be able to make sure that these indicators are adequate, correspond to the actual processes of the company and do not require adjustment. In order for such a model to have practical value, it is necessary to attach to it and personal system budgeting staff motivation. It is not necessary to introduce penalties into it - this demotivates the staff. It is better to build motivation on the principle of “salary + bonus for achieving targets + additional bonus for a result that exceeds the target” (for more information on how to develop a motivation system, see).

As previously mentioned, the key goal of the activity commercial enterprise is profit maximization. Therefore, the budgeting process should begin with determining the level of profit, expressed in monetary units, in rubles, for example, which the enterprise needs to achieve for the budget period (usually a calendar year). The owners of the enterprise determine (approve) the amount of the desired profit, based on their vision of the prospects further development business, and also, if necessary, on the basis of consultations with the top management of the company - this is the most acceptable option for starting the formation of the Budget.

Further, within the company, the marketing and commercial departments independently form and submit their income budget calculations for protection to the Budget Committee. As a rule, marketers have overestimated income expectations, while merchants have underestimated ones. As a result, within the framework of the meetings of the Budget Committee, there is a preliminary approval of the unified income budget, which is "somewhere between those presented."

Top level key financial indicators revenue budget are two indicators: gross revenue and return on sales (or, as recent times it has become fashionable to say “margin”), expressed in rubles and percentages, respectively. Return on sales is the share of the company's gross profit in revenue. Thus, the result of income budgeting is the planned gross profit.

After preliminary approval, the revenue budget is sent to the production and operating divisions of the company in the form and in the detail that these divisions need to form a budget for variable costs (not to be confused with cost). Variables are costs that, other things being equal, change in direct proportion to the volume of products sold (for each homogeneous category of goods/services/works). You can also find the definition of variable costs through their ratio with gross revenue: if such a ratio is constant with a change in revenue.

Let's digress here to one real case from life that the author had to face. In one of the companies, being present at the discussion by the general and financial directors of the expenditure side of the budget, at some point it became clear that colleagues fundamentally do not understand each other when using the concept of variable costs. It turned out that the general director under variable costs meant those costs, the definition of which we gave above. And the financial director under variable expenses understood those expenses, the ratio of which to revenue changes with a change in revenue, that is, physically - exactly the opposite. Here is such a conflict ... In more detail we will touch on the problems of communications and the use of certain terms and concepts within one company in the knowledge management section.

So, production and operating units calculate, form and send their budgets of variable costs to the Budget Committee in accordance with their organizational structures and the structure of the income budget, where all the budgets provided are summarized into a single Variable Cost Budget of the enterprise.

The key indicator of the variable cost budget is its ratio to revenue, expressed as a percentage. The lower this percentage, the better.

The difference between gross profit and variable expenses is usually called contribution margin, and its percentage of revenue is called margin. For a commercial enterprise, the phrase "living within our means" means exactly that marginal profit should cover the cost of current expenses that ensure the existence of the enterprise (office rent, salaries, along with payroll taxes management personnel, maintenance of office equipment, communications, public utilities etc.), in other words, the contribution margin must be greater than the total fixed costs.

The next stage of budgeting is the formation of a budget for fixed costs. After that, the budget of income and expenses is reduced - we subtract fixed costs from the marginal profit - and we get that financial results or the profit that the enterprise can achieve if such a budget is approved. Note that such a budget is, so to speak, a "people's budget" or a budget built from the bottom up.

Most often, the “people's budget” turns out to be either deeply unprofitable, or the planned profit obtained in it is far from what the owners want to receive, i.e. significantly less than their expectations. Thus, the second iteration begins budget process, namely the search for ways to optimize the income and expenditure budget (BDR). At the same time, the process of forming a cash flow budget (BDDS) is launched in parallel. The DDS budget is built on the basis of the expected financial conditions for working with counterparties of the enterprise, as well as the conditions for paying wages to personnel and budgetary deductions (taxes, fees). As a result, the financial flow for the budget period and the amount of funds that need to be attracted from outside are calculated to replenish current assets companies for the purpose successful implementation income and expenditure budget - the size of the cash gap.

Let's assume that optimization actions in general within the framework of the BDR and BDDS were carried out:

Increase the sales budget as much as possible;

As far as possible increased profitability of sales;

To what extent is it possible to "cut" costs;

Financial conditions with counterparties have been revised as much as possible, firstly, without worsening relations with partners and, secondly, to reduce the cash gap as much as possible;

Further, the financial director of the enterprise decides on the possibility of external injections of funds, for example, by attracting bank loans in order to close the predicted cash gaps. Moreover, if the possibility of their complete annulment is not found, then the BDR is once again adjusted.

The process described in more detail, especially in terms of optimizing sales and expense budgets, will be covered later.

As a result, by mobilizing the entire internal potential of the top management team, in the hands of CEO the company's budget appears, and, as it often happens, the final financial result in the form of profit (net or EBITDA - this is a matter of organizing a business) turns out to be less than the target level of owners. And what to do?