Planning, budgeting and forecasting

Topics in this module

1. 01

   Strategy, responsibility and budget planning

   Connect strategy with budgets, distinguish forecasts from targets, and assign accountability to the managers who can influence each decision.

   7 sections · 7 min read

   2 videos2 PDFs6 images

   See the topics covered

   1. Start with the decision the budget must support
   2. Keep plans, targets and forecasts distinct
   3. Make the assumptions operational
   4. Match responsibility with decision authority
   5. Separate traceability from controllability
   6. Self-check: challenge a proposed performance report
   7. Sources and further reading
2. 02

   Building the master budget

   Build linked operating budgets from sales and inventory decisions, then reconcile production, materials, labour, overhead and budgeted profit.

   8 sections · 8 min read

   2 videos3 PDFs6 images

   See the topics covered

   1. Build one connected model
   2. Reconcile sales with finished goods
   3. Keep material usage and purchases separate
   4. Translate output into labour and overhead
   5. Carry production costs into profit
   6. Adapt the model to a retailer or service provider
   7. Self-check: follow a revised sales estimate
   8. Sources and further reading
3. 03

   Cash forecasts and flexible budgets

   Connect profit to cash and the balance sheet, prepare budgets at different activity levels, and make uncertainty visible before committing resources.

   7 sections · 8 min read

   1 video1 PDF3 images

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   1. Move from earnings to payment dates
   2. Work through a two-month cash forecast
   3. Reconcile the closing financial position
   4. Budget across more than one activity level
   5. Test uncertainty without creating false precision
   6. Self-check: a delayed receipt
   7. Sources and further reading
4. 04

   Analysing and explaining budget variances

   Separate activity, price and resource-use effects, reconcile a profit result, and investigate budget variances without confusing a calculation with a cause.

   10 sections · 12 min read

   7 videos8 PDFs11 images

   See the topics covered

   1. Ask three different questions about performance
   2. Set up one consistent production record
   3. Reconcile the budget, activity and actual outcome
   4. Distinguish revenue growth from profit growth
   5. Separate material price from material consumption
   6. Read labour rate and efficiency together
   7. Link variable overhead to its chosen driver
   8. Keep fixed spending separate from absorption
   9. Investigate the cause before judging the person
   10. Sources and further reading
5. 05

   Budget behaviour and performance

   Understand how participation, realistic targets and well-designed rewards influence budget decisions, accountability and ethical reporting.

   7 sections · 7 min read

   1 video1 PDF3 images

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   1. Ask what the budget encourages people to do
   2. Combine strategic direction with operational knowledge
   3. Distinguish transparent uncertainty from hidden slack
   4. Set targets alongside the means to achieve them
   5. Design rewards without sacrificing the longer term
   6. Protect reporting quality and test your judgement
   7. Sources and further reading
6. 06

   Adaptive budgeting and forecasting

   Compare incremental, zero-based, activity-based and rolling approaches, and assess when changing the wider budgeting system may help.

   8 sections · 8 min read

   1 video1 PDF3 images

   See the topics covered

   1. Choose the change that addresses the actual problem
   2. Recheck the starting point in incremental budgeting
   3. Use zero-based review to challenge the reason for spending
   4. Translate demand into activities and resource capacity
   5. Keep a forward view without confusing forecasts and targets
   6. Consider the wider management system
   7. Self-check: recommend a combination with reasons
   8. Sources and further reading