Setup a Budget

Budget

If this company uses quickbooks you can do the budget thru this accounting system. It gives the history of all past revenue & expense lines. Hope this helps

Setting up a Budget

MasterPlan is a financial planning tool that lets you set up budgets. Although designed for individuals, you could extend it to include a company. MasterPlan includes the tax laws for individuals (even AMT). Go to www.masterplanner.com and sign up for a free demo. It can project out up to 99 years.

I want to say thanks to both on my budget question

Thank you so much for both your answers. I have a lot of studying to do to make sure I truly understand this process.

Thanks again.

Utilize Cash Flow Statement in addition to Balance Sheet

In addition to the excellent advice given by John Damico, in the first comment to your posting, I would suggest adding a cash flow statement in addition to the balance sheet. You will need to gain an understanding of the timing of cash payments for expenditures as well as timeliness of customer receivable collection. You should factor in the impact of and /or need for lines of credit. You should also provide multiple scenarios, or stress tests, to gauge the impact of customer’s late or missed payments as well as potential for supply chain disruptions.

Budget Answer

Hi Tammy,

There are several steps involved with setting up a budget (s) for a company. First, you must interview your client and get a good understanding of his/her fiscal year plans to include the following:1). Sales revenue (he/she may not know this your job is to try and project sales using both historical data and current economic conditions.

2). Get expenditure details i”e” what type of investments will your client make in the upcoming fiscal year. This can include building expansion, capital equipment, increased marketing investments etc.3). Learn about your clients “growth” expectations such as staffing. Does your client plan on adding staff?You should walk away with enough data to put together three components of the master budget. 1. Start with the revenues forecast2. Expenditures3. InvestmentsOnce you have this data you can then put together a master budgeted income statement. Before you do this you have a good idea what your clients COGS % is of revenues.

Example P&LRevenuesCOGSOverhead ExpensesCapital Investments (if any)PayrollEBITATax % (EBITA * 1-tax rate)Net Profit or Profit Contribution

Once you have the annual budgeted income statement, you then begin devising the quarterly/monthly budgets. Your client should have a solid strategic plan in place as far as what growth expectations and revenues that he/she would like to generate for their business.

Hope this helps,John Damico, Orlando Fl.