About

“Budgeting is right up there with a root canal,”
said Peter L. Krebser, controller of Pfizer Inc.’s Quality Control division

The mere thought of number crunching and budgeting can be daunting for some of us as the jargons seem so technical and alien. But that’s largely due to lack of training and understanding of the process.

To improve departmental performance, it is vitally important that managers understand and develop practical budgeting and cost controlling skills to meet both customer needs and financial expectations. Organisations that fail to accurately budget risk overspending at the beginning of a financial period, which often eventuates in drastic cost cutting measures at the end of the period to try and hit the established financial goal.  

Budgeting and cost control for non financial managers is designed to help managers to consistently and continuously deliver operational objectives while achieving financial performance goals.

Outline

Overview of budgeting and forecasting
This section will explain why budgeting and forecasting is important and the reasons why it should include all areas of your organisation.   
•  Understanding the objectives of budgeting
•  Aligning budgets with:
- Organisation’s purpose, strategy and goals
- Goals and expectations - identifying current and short term goals
•  Agreeing deliverables (services, products and projects) as well as the associated financial budget
- Coordination of all activities within an organisation
- Setting targets
- Motivating staff
- Obtaining additional funding
- Making best use of financial and non financial resources
•  Understanding the process of budgeting
- Types of budgets
- The role of Capital and Operating budgets
- Departments involved
- Role of finance and senior management
- Role of non financial managers
- The principal budget factor (limiting factor)
•  Understanding the different ranges of practical budgetary techniques
•  Budgeting as a performance management tool
•  Why are some areas of an organisation measured monthly and others measured weekly or daily?

Methods of preparing budgets - How to select the best method
This section will examine the best approaches and strategies for preparing budgets and the importance of budgeting processes and timelines.
•  How are budgets linked to cost centres and projects?
•  Budget process timelines and how it affects decision-making
•  Balancing the overall budget and the need for tradeoffs
•  Budget approach
- Top-down - is it appropriate for lean organisational structures?
- Bottom-to-Top - why it’s not practical for large organisations
- Budgeting from where you currently are - the incremental budget approach
- Budgeting from scratch - the zero based budget approach
•  Budget strategy
- Budgeting by cost centres and projects - the internal view
- Budgeting by customers and products/ votes and output classes - the external view

The hows and whys of budgeting and cost control - Practical tips that will work for you
Why is it that some managers are able to prepare credible budgets and cost their areas with pinpoint accuracy? This section will give you the knowledge and confidence to create spot on budgets.  
•  Classifying costs - Identifying the costs to manage and understanding how and why these change
- Controllable vs Non controllable costs
- Fixed vs Variable costs
- Committed vs Discretionary costs
•  Quantifying costs for operational activities and capital projects
- Incremental costs
- Lifetime costing
- Cost commitments
•  How to cost specific activities and processes
- Costing Projects and New Initiatives
- Batch Costing and Bill of Materials (BOMs)
- Process Costing
•  Full costing - Establishing overall costs and assessing value for money
- Direct costs vs Indirect costs
- Front line costs vs Support costs
- Allocating overheads to products and services/ votes and output classes

Managing an existing budget to reduce budget variances
Budgets represent plans and future intentions of your organisation.  Have these plans and intentions been implemented in the real world?  This section will provide tips and tools to successfully implement budgets.   
•  Using financial reports to track progress
•  Are you on track?  Are any management interventions needed?
•  How to take corrective actions

Budgets vs. Forecasts
What is the difference between budgets and forecasts?  How often do we need to forecast?  Why  is it important to phase budgets across the months of the year?  Should budgets and forecasts be based on pasthistory or future predictions?
•  Phasing of budgets
•  Static budgeting – Pros and cons
•  Flexible budgeting – Pros and cons
•  Forward looking approaches vs approaches based on historical information
•  Rolling forecasts

Budgeting for risks and opportunities
This section will enable you to establish the financial drivers and financial risks of your division/cost centre/ project.  You’ll be able to establish the financial impact of changes in organisational activity and better manage financial risk. You’ll be able to maximise value around your limiting factor such as lack of finance, lack of skilled people, lack of equipment etc.
•  Successfully quantifying costs and revenues for your budget
•  What is the difference between Mark ups and Margins?
•  Understanding different types of margin and when to apply them - Gross margin, Net margin and Contribution margin
•  How to maximise value from limited resources
•  Identifying financial drivers

Sum up - How to make budgeting a valuable tool for driving your organisation’s future and achieving your management goals
•  Challenges of budgeting
•  Maximising future potential and future opportunities
•  Establishing the best approach to achieve your goals

Facilitator

Kevin Lee, Director, Business Skills Training

Kevin Lee BA (Hons), Pg Dip, MBA, ACMA runs a consultancy for business skills development.  He is a Chartered Management Accountant with 20 years experience of Government Agencies, Corporates and SME’s.  Kevin is a member of the New Zealand Association for Training and Development, the Human Resources Institute for New Zealand and accredited as a Belbin Team Role facilitator.  His post-graduate qualifications include a post-graduate diploma in business administration with distinction and an MBA in which he majored in finance.  

Kevin specialises in helping managers and staff to develop practical financial skills and knowledge.  He is passionate about making finance relevant, understandable and fun.  He enables people to develop their business acumen and to apply financial management practices that suit their organisation’s needs and circumstances. 

Kevin’s clients include: Ministry of Justice, Department of Internal Affairs, ANZ National Bank, Meridian Energy, Auckland District Health Board and Auckland City Council.   

Kevin’s approach is highly practical, using only the financial theory that people need to know, and then building skills and knowledge through case studies, examples and small group work.  He is able to provide “real life” advice based on his experience in CFO roles and his experience of managing major Capex projects, implementing financial systems, improving financial processes and procedures and achieving ongoing efficiency savings.   

Kevin’s passion, enthusiasm and commitment result in excellent feedback from participants at all levels: Directors, General Managers, Accountants, Senior Managers, Middle Managers, Supervisors and Support Staff.     

Kevin Lee is also facilitating:

• Cash Flow and Liquidity Management for improved performance
• Commercial Approaches for Government Agencies
• Effectively Managing & Organising Accounts Payable
• Effectively Managing and Organising Accounts Payable
• Essential Finance Skills for EAs, PAs & Administrators
• Finance & Accounting Skills for Managers in the Health Sector
• Financial Machinery of Government
• Managing Credit, Accounts Receivable and Debt Recovery
• Managing the Numbers: The Financial Skills for Non Financial Managers
• Practical Budgeting and Forecasting
• The Effective Accounts Assistant

In-house Training