Liabilities Discussion
You discussed sales within your budget. What tools or resources would you use to manage sales? What will be your process in providing great estimates? It is very critical for managers to be very close to accurate during this stage of budgeting. Please explain.
Who within the organization is responsibility for managing the revenue centers? How would you manage the revenue center to ensure the amount of revenue predicted is on schedule or received at the budgeted time frame?
The highlighted part is what the questions are refering to.
The process of budgeting concerns the establishment of planned expenditures, usually in a detailed approach. However, there are several pros and cons which are experienced in the process of budget preparation for a company.
Some of the pros which a company gains through carrying out the process are, first, through a budget, a company can earmark its money (Bacon, 2014). In this case, the company or an individual is hence in a position to make a decision ahead concerning how the money is to be spent. Therefore, the actions of spending, saving as well as giving out money is intentional. Moreover, an individual or a company can create a monthly financial plan. Through the process of budgeting, a company's spending is kept on track (Bradshaw, 2007).
Furthermore, through the focus of a given milestone, such as payment of debt, or the achievement of a specific financial goal, the budgeting tool will significantly assist in the attainment of the objective (Bacon, 2014). Additionally, budgeting result to an organized approach in the manner a company spends its money. However, budgeting process exhibits its cons, the process creates a restrictive financial lifestyle of a company, thus resulting in limitation of spending. Also, the budgeting process will only work if followed completely, failure to observe the laid out spending will hence not keep track of the records. Additionally, the process of budgeting takes a lot of time due to the need to ensure priorities has been taken into consideration (Bradshaw, 2007).
The two critical budget items essential in the management of a company are sales budget and the cash budget. The sales budget is of great significance as it is the first one prepared, while the other budgets depend on it. It represents the sales revenue (Bacon, 2014). The cash budget demonstrates the cash flows anticipated in a company. It is regarded as an important financial budget. Moreover, it comprises of sections such as cash receipts, cash disbursement, and financing.
The reporting system responsibility begins from the lowest level and moves upward. It starts with the departmental managers, who present their report to the plant manager, who observes the controllable cost as per each of the departments (Bradshaw, 2007). The controllable manager then reports to the vice president, who reports to the president. One advantage of the approach is the possibility to tailor the cost report for each recipient. The disadvantage is the possibility to exhibit errors up the ladder as a result of few responsibility reports.