Towards the end of the year, it is also the annual financial budgeting time. Do you really know how to make a budget?

Financial budget is an important step in reflecting future fund receipts and expenditures, operating results, and financial conditions. In the operation of an enterprise, conducting trial calculations in advance can avoid the situation of fund income, fund expenditure, and fund shortage caused by production, operation, and investment activities. Therefore, financial budget is an important component of enterprise operation.

What does the financial budget including？

it including cash budget, estimated income statement, estimated cash flow statement, and estimated balance sheet.

- Cash budget

(1) Budget for financial expenses.

- Estimated Income Statement

(1) The expected income statement is a financial budget that comprehensively reflects the operating results of a company during the budget period.

(2) Compile based on relevant budget data such as sales, product costs, and costs.

- Estimated Cash Flow Statement

(1) The expected cash flow statement is a financial budget that reflects the cash inflows and outflows of a company over a certain period of time.

(2) Reveal the cash flows generated by business operations, investment activities, and financing activities from both cash inflows and outflows.

- Estimated Balance Sheet

(1) The estimated balance sheet is a financial budget that comprehensively reflects the financial condition of a company during the budget period.

(2) It is based on the opening balance sheet and adjusted according to relevant budget data, such as sales, production, capital, etc.

What are the steps of financial budgeting

1. Setting goals

Before preparing financial budgets, it is necessary to collect and organize historical data both inside and outside the enterprise in order to have a more comprehensive understanding of the current business, financial situation, and future development trends.

2. Budget execution and preliminary preparation trial by each department

(1) Cost planning: The production department calculates production capacity allocation based on sales volume, judges the trend and relationship of economic indicators and data, infers trial value, and determines whether it is necessary to increase fixed assets.

(2) Expense Planning: Each department calculates expenses based on last year's expenses and this year's tasks. For example, the marketing department should calculate the advertising and promotion costs for this year; The sales department should calculate channel costs; Each department should also calculate labor costs, travel, office, and training costs. Each item needs to be discussed and reviewed, and whether the expenses are reasonable and the relevance of the benefits brought must withstand the test.

(3) Trial calculation of gross profit and net profit: The company's gross profit and actual profit margin can be calculated based on the above situation. If it's not ideal, then turn it around and make some choices, such as which expenses can be avoided? The revenue target needs to be further improved, and the efficiency of fixed assets investment has been improved.

3.Approval and submission, forming financial budget resolutions

(1) Based on relevant financial expertise and plans formulated by the enterprise within a certain period of time, prepare tables (first prepare sales trial calculations, then prepare production trial calculations, and sales management expense budgets).

(2) Preparation completed, target issued: After completion, if the revenue, profit and other indicators are KPIs of each department, they need to be issued to each department. Each department head needs to clarify their own goals and control department expenses.