C. Finance
Skill 1. Prepare Budget
- 1.1define importance of using a budget provides:
- a) strategy for achieving financial goals
- b) tool for ongoing evaluation of financial situation
- c) mechanism to respond to ongoing changes
- d) cash flow information
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- 1.2 develop budget
- a) seek input from key people, for example:
- accountant
- banker
- lawyer
- business people in related areas
- clients
- competitors
- employees
- investors
- suppliers
- b) establish budget format:
- create master budget for fiscal year
- determine appropriate budget categories, e.g. operating
costs, cost of goods sold
- incorporate various critical factors, e.g. receivable and
payable turnover, inventory
- c) review previous budgets:
- compare actual to projected sales and costs
- d) estimate sales for specific time period, considering, for
example:
- competition
- economy
- history
- industry trends
- sales targets
- seasonality
- determine:
- e) resources needed, e.g. materials, services, employees, equipment
- break-even point
- how funds will be spent:
- review previous budgets and allocations of funds
- estimate costs, e.g. contract labour, payroll, product,
rent, advertising, promotions, professional fees,
- insurance, office expenses, maintenance, capital expenditures
- how assets will be acquired, e.g. lease vs. purchase, finance
vs. cash
- f) estimate revenue and expenditures:
- break down into weekly or monthly budget
- detail projected:
- cash flow, e.g. weekly, monthly
- costs, e.g. fixed and variable
- credits
- receivables
- return on investment
- revenues
- sales
- tax liabilities
- g) prepare necessary budget statements, e.g. cash flow statement,
statement of operating expenses
- h) establish budget control guidelines, e.g. compare costs to
industry standards
- i) schedule regular budget reviews:
- compare actual to projected totals
- j) submit budget for approval, if necessary, e.g. to shareholders,
bank or partners
- k) revise as required:
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- 1.3 implement budget
- a) adhere to budget control guidelines, for example:
- increase or reduce number of employees
- increase or reduce advertising budget
- b) monitor revenues and expenses within established time frames,
for example:
- bank reconciliations
- sales reports
- job/project costs
- variance history
- c) identify variances between budgeted and actual figures, for
example:
- determine cause
- respond accordingly, for example:
- revise budget and activities as required
- reallocate funds to cover unexpected expenditures and/or
revenue
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Skill 2. Prepare Budget
- 2.1 monitor accounting procedures
- a) review accounting procedures regularly:
- examine receivables, payables and cash flow
- b) review interim in-house statements:
- complete monthly
- consult financial advisors as required, e.g. for tax planning,
capital costs, depreciation or cash flows
- c) review annual financial statement prior to year end:
- consult appropriate professionals, e.g. accountant, tax
planner
- consider:
- tax planning consequences
- possible legislation changes
- d) review cash management procedures, considering:
- effectiveness
- security
- credit authorization practices
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- 2.2 use cash flow statement
- a) use cash flow statement to identify shortfalls and overages
in available funds:
- plan for shortages
- invest overages
- b) revisit on a regular basis:
- consult banker, accountant or bookkeeper
- c) revise or update as necessary
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