Goldia.Net

YNAB Pro Makes Budgeting Simple

Do you need help budgeting? For most the answer is of course. Budgeting does not need to cause worries. Budgeting can be easy using YNAB Pro.

What is You Need A Budget Pro?

YNAB is a software program used to create and stick to a budget. You Need A Budget Pro makes it easy to set limitations for budgeting categories and track how you are doing.

The goal is to quit living paycheck to paycheck. This is accomplished by creating a one month cushion. The one month buffer is equivalent to how much you get paid in one month. The cushion is used to budget for the current month. For example if the current month were February, you would be budgeting and spending money you made in the previous month. Don’t worry if you don’t have enough money saved up for your buffer. YNAB Pro will show you how to create it.

Once you have a cushion created you will no longer be stunned when unpredicted expenses such as car trouble or health expenses come up. You can now roll with the punches. You are no longer restricted by one months worth of pay. Go ahead and dip into your reserve cushion. You Need A Budget will adapt your next months budget by subtracting whatever you borrowed for the unannounced expense. So if you are twenty dollars over buget in May, then you will get twenty less dollars to use for budgeting in June.

Here are theYNAB Pro basics.

Are you over budget? Are you below your budget? With You Need A Budget you will quickly be able to tell.

When you begin the software you create budgeting categories or use the defaults. You can use basic categories such as Debt Reduction, or break it down with subcategories such as “Debt:Charge Cards” and “Debt Reduction:Car Loan”.

Next, enter your transactions in the register. Record the transactions manually or download them in Microsoft Money or Quicken format from your bank. You will then assign a budgeting category to every transaction in your register.

The budget screen shows your financial information for the current month using three columns; Budgeted, Spent and Balance. The “Budgeted” column will be filled in manually by you. As you record an amount for each category it will be deducted from that months money available. The next column “Spent”, will be filled in automatically as you assign categories to each transaction in the register. The last column “Balance” will display how much under or above you are for that category.

The YNAB Pro report screen will give you a visual representation of where you stand. This screen lets you to easily learn how much money you are dropping each month and your ongoing balance for each budgeting category.

You Need A Budget, is all about budgeting.

There are many personal finance programs. For a sensibly priced Quicken Alternative or a Microsoft Money Alternative, You Need A Budget is the solution for you. Most programs have to many bells and whistles distracting the user from the budgeting basics. You Need A Budget Pro uses a established methodology making budgeting simple and easy to stay with.

Tags: Budgeting, Makes, Simple, YNAB

Flexi-budget – Planning for uncertain times

During these uncertain times, companies need to maintain the discipline of good planning and budgeting, but how can you plan and budget when the goalposts keep moving? Orchard Growth Partners is rolling out a flexible planning and budgeting methodology which allows companies to prepare flexible and layered budgets. To find out more about Orchard’s approach to flexible budgeting contact us at www.orchardgrowth.com.

Entrepreneurs are tired of all the gloom

Everyone’s back from holiday, the beachwear has been packed away for another season and thoughts are starting to turn again to business.

Many of the entrepreneurs we work with have had enough of all the gloom over the last twelve months. They didn’t set up their businesses to manage the cutting of costs. Entrepreneurs set up businesses to bring their ideas to life and grow them further, and that’s want they want to return to now.

Having said that good entrepreneurs will have used the last year to adapt their business models to the challenging times as well as to make their organisations leaner, fitter and better run.

This time last year the climate of uncertainty was such that many SMEs simply didn’t bother to preparing plans or budgets as they didn’t know what assumptions to use. Was the banking crisis just going to affect the City or would the problems seep across the country? It was only when the Woolworths name disappeared from the High Street that people began to accept that the collapse of Lehmans and HBOS would affect them and their businesses too.

So, many companies have been working without detailed plans and budgets and there’s a danger that some companies will not get back into the discipline of a proper planning and budgeting process.

Is it any easier to budget this year than last?

Well, some people would say not much easier and we have sympathy with that view. However, going a second year without a proper budget just sounds too risky. Therefore, we’re recommending that our clients prepare flexible budgets, in a format which can be readily adjusted to cater for changing circumstances.

There is uncertainty. Companies may not know, for example, when they will appoint a new sales person. In which month should the costs be budgeted? When should they expect revenues to increase from that appointment? When will they open the new office they postponed last year? When will they launch the new product that’s been in development?

Budgets always have assumptions – that’s their strength and their failing. However, if you use budgets properly to monitor performance then how can you hold the management team accountable when there are such big unknowns?

Flexible budgeting

Orchard Growth Partners is rolling out a flexible budgeting methodology which allows companies to prepare flexible and layered budgets. The approach budgets for your business in layers eg. a layer for the ongoing business (split into departments if appropriate), followed by layers of new activities eg. new locations, new headcount, new product launches. Companies can then include or exclude these new activities. For example, what happens if your company decides not to launch that new product? What does it mean for 2010 revenues and profits? Companies can also compare different courses of action and decide which components of growth to include in their final budget.

Once the budget is agreed, Orchard can assist in rolling the budget forward every month, to produce forecasts and adjusting and amending the budget as appropriate. The last thing an entrepreneur wants to hear in their business is “You can’t do that – it’s not in the budget!” This phrase is guaranteed to cause maximum frustration to anybody involved in trying to grow a business. For businesses in this situation, it’s time to throw off the rigidity of traditional budgeting and embrace the concept of flexible planning.

Business moves fast and budgets rarely keep up

It is a sad fact of life but a budget is more than likely to be out of date virtually the moment it is completed. Business today moves very quickly and it is vitally important for any business, big or small, that its planning processes are flexible enough to move with it. Therefore every new opportunity or setback should be used to review business plans and reset business goals. Maybe that salesman will land a long sought-after contract. Perhaps that merely promising product can become a key product with some marketing. Therefore, the business owner should examine the options, recheck any constraints that might exist and use the opportunity to prepare a new forecast to refocus your business priorities. By doing this, the new forecast may actually end up exceeding the original budget.

The secret is to combine a budget with a series of regularly updated rolling forecasts that replace the often backward looking comparisons with budget, and focus on the requirement to know where the business is going rather than where it has already been.

Remember – budgets and business plans are designed to help the business – don’t become a slave to them!

To find out more about Orchard’s approach to flexible budgeting contact us at www.orchardgrowth.com.

Tags: Flexibudget, Planning, times, uncertain

Budgets In Corporate Sector-Tool For Cost Control

INTRODUCTION:

In any Organization, departments prepare budgets and estimates for the smooth flow of business activity which is inevitable. Budgets are formal quantitative statements of the resources set aside for carrying out planned activities over given periods of time. As much, they are widely used means for planning and controlling activities at every level of the organization. There are a number of reasons for their wide usage. In a simple term budget refers to expenditure plan. In a normal parlance, there are two kinds of budgets. Namely, operating budgets and financial budgets. The operating budgets point out the goods and services the organization expects to devour in the budget period. They usually list both physical quantities (such as barrels of oil) and cost figures. The financial budget spell out in detail the money the organization proposes to spend in the same period and where that money will come from. These types of budgets make up the firm’s overall budgetary plan. Flexibility in budgeting is necessary because of the cyclicality of the market and to control the cost.

Operating Budgets:

Operating budgets are classified as expenses, revenue, and profit budgets.

Expense Budgets: There are two types of expense budgets, one for each of the two types of expenses centers – engineered cost budgets and discretionary cost budgets.

Engineered cost budgets are typically used in manufacturing plants but can be used by any organizational unit in which output can be accurately measured. These budgets usually describe the material and labor costs involved in each production item as well as the estimated overheads costs. Hewlett Packard, for example, has an annual budget that describes the labor, material, and overhead expenses involved in manufacturing its computer peripherals (printers, plotters, and boards). Such an engineered cost budget is designed to measure efficiency. Exceeding the budget means that operating costs were higher than they should have been.

Discretionary cost budgets are typically used for expenses centers — administrative, legal, accounting, research, and other such departments in which output cannot be accurately measured. Discretionary cost budgets are not used to assess efficiency because performance standards for discretionary expenses are difficult to devise. For example, if Procter & Gamble’s research and development department exceeds its budget, it will often be difficult for managers to determine how that department’s work could have been performed more efficiently.

Revenue Budgets: Revenue budgets are meant to measure marketing and sales effectiveness. They consist of the expected quantity of sales multiplied by the expected unit selling price of each product. The revenue budget is the most critical part of a profit budget, yet it is also one of the most uncertain because it is based on projected future sales. Companies with a large volume of back orders or companies whose sales volume is limited only by their productive capacity can make firmer revenue forecasts than can companies that must reckon with the fluctuations of an unstable or unpredictable market. However, marketing and sales managers of even the latter type of company can control the quality and quantity of their advertising, service, personnel training, and other factors that affect sales. This control gives them some influence over sales volume and frequently enables them to make reasonably accurate sales estimates. Deere also influences sales through its control promotion and dealer incentives.

Profit Budgets: A profit budget combines cost and revenue budgets in one statement. It is used by managers who have responsibility for both the expenses and the revenues of their units. Such managers head an entire division or company, like Corning Inc.’s technical products division. Profit budgets, sometimes called master budgets, consist of a set of projected financial statements and schedules for the coming year. Thus, they serve as annual profit plans.

Budgeting procedure
The budgeting process typically begins when managers receive top management’s economic forecasts and sales and profit objectives for the coming year, along with a timetable stating when budgets must be completed.      The forecasts and objectives provided by top management correspond to guidelines within which other managers’ budgets will be developed.

In a few organizations, the preference is for “top-down” budgeting. Budgets are imposed by top managers with little or no consultation with lower level managers. Most companies, however, have a preference to the process of ‘bottom up” budgeting: Budgets are prepared, at least initially, by those who must implement them. The budgets are then sent up for approval to higher level managers.

Bottom up budgeting has a number of advantages for many organizations. First, supervisors and lower level department heads have a more intimate view of their needs than do managers at the top, and they can provide more realistic details to support their proposals. They are also less likely to overlook some vital ingredient or hidden flaw that might subsequently impede implementation. Managers are also more strongly motivated to accept and meet budgets they have had a hand in shaping. Finally, morale and satisfaction are usually higher when individuals participate actively in making decisions that affect them.

The process by which lower-level managers participate in developing budgets is similar to the multilevel planning process described. Supervisors prepare their budget proposals using the guidelines drawn up by upper management. Department heads then review the lower level budgets and resolve any inconsistencies before compiling them into department budgets. These budgets are then submitted to higher level managers for approval. The process continues until all budgets are completed, assembled by the controller or budget director, and submitted to the budget committee for further review. Finally, the master budget is sent to top management (the president, chief executive officer, or board of directors) for approval.

Role of budget Department and the workforce:

Even though developing budgets is the responsibility of managers, they may receive information and technical assistance from the staff of a planning group or formal budget department or committee. These groups are likely to exist in large, division organizations in which the division budget plays a key role in planning, coordinating and controlling activities.

The budget department, which generally reports to the corporate controller, provides budget information and assistance to organizational units, designs budget systems and forms, integrates the various departmental proposals into a master budget for the organization as a whole, and reports on actual performance relative to the budget.

The budget committee, made up of senior executives from all functional areas, reviews the individual budgets, reconciles divergent views, alerts or approves the budget proposals, and then refers the integrated package to the board of directors. Later, when the plans have been put into practice, the committee reviews the control reports that monitor progress. In most cases, the budget committee must approve any revisions made during the budget period.

Problems in budget development:

During the budget development process, when the organization’s limited resources are allocated, managers could fear that they will not be given their fair share. Tension can grow as competition with other manager’s increase. Anxieties might also arise because managers know they will be judged by their ability to meet or beat budgeted standards. Hence, they are anxious about what those standards will be and may over state their needs to create some slack. Conversely, their senior managers are concerned with establishing aggressive budget objectives As a result, the senior managers will often try to trim their mangers’ expenditure requests or raise their revenue targets. The result can be an ever widening web of distrust and anxiety, in particular if employees begin to suspect the budgets will not meet their needs. Organization wide participation in the budgeting process often minimizes these types of anxiety reactions. When all managers are involved in budget development, they are more likely to be satisfied with resources allocations.

One difficulty with budgets is that they are often inflexible. Thus, they could seem inappropriate for situations that change in ways beyond the control of the budget. For example an expense budget based on annual sales of million may be completely off track if sales of million are achieved. Since the expenses of manufacturing almost always increases when more items are produced to meet larger demand, it would be unreasonable to expect managers to keep to the original expenses budget under these circumstances.

To deal with this difficulty, many managers resort to a variable budget. This type of budget is also referred to as a flexible budget, sliding scale budget and step budget. Whereas fixed express what individual costs should be at one specified volume, variable budgets are cost schedules that show how each cost should vary as the level of activity or output varies. Variable budgets are therefore useful in identifying in a fair and realistic manner how costs are affected by the amount of work being done.

Three types of costs must be considered when developing variable budgets: fixed, variable, and semi-variable costs.

1. Fixed Costs: Fixed costs are those that are unaffected by the amount of work

Tags: Budgets, Control, Corporate, Cost, SectorTool

Best Practice in Developing Business Budgets

Developing a business budget is an exercise that all accountants undertake on an annual basis and which forms an integral part of any successful business planning.

A budget is a document that allocates financial, physical and human resource use over a specified period of time to attain certain goals.

A good budget upholds organizations’ long-term goals and should allocate resources to activities that will drive the company towards achievement of such goals.

The following are the best practices adopted by world class businesses while developing a budget:

1. Link budget development to corporate strategy

To best serve the company’s long term goals and objectives the managers develop a budget that is in line with the company’s corporate strategy.

This unites together personnel in focusing what matters most to the organization and avoids uncoordinated and scattered efforts by various departments and managers.

Read more on corporate governance:

http://www.business-competence.com/corporate-governance.html

2. Leverage on technology while designing the budget

More companies are automating their budget management to ease the process and also involve every stakeholder as much as possible. When developing a budget it is best that every stakeholder is kept in the loop on progress during the budget implementation period on performance.

Technology eases business budgeting process and makes it possible for line managers’ inputs to be incorporated in the budget. Effective technology can be used to make, updating and track of budget much easier.

3. Tie employee incentives to performance measures

To ensure that the business budgeting is a success leading companies tie organization reward system to how best they meet the budget.

While managers are expected to uphold the organizational goals in some instances they can engage in counter productive activities creating risks. Tying budget to the reward system can bring a balanced conduct within the management.

4. Keep an eye of cost management in the budgeting

Managers should keep abreast current costs and probable futures costs to ensure that they provide the budget developers with accurate and relevant information.

This is very useful as it reduces time and cost of developing a budget, since information is readily available.

5. Manage effectively the budget process

To develop a quality budget at low cost the managers should streamline the process by ensuring necessary information is available for access during budgeting and avoid possible delaying circumstances. This will ensure the budget cycle is cost effective and budget developed is effective.

6. Ensure that the budget is flexible to accommodate change

A good budget should be flexible such that it can incorporate changes in the future. Ideally the future cannot be fully be determined and therefore a good budget should be one that can accommodate changes brought by uncertainties in the future.

This gives stakeholders, confidence to be in a more willing position to retain their relationship with the organization.

7. Develop allocation procedures that support organization’s key strategies

Organizations that follow best practice in budgeting list down procedures on how to allocate resources. They allocate resources in a manner that supports those activities that are in line with key strategies.

These procedures and guidelines help the organization to save time in resource allocation decisions and affirm organizations commitments as planned. Success in business budgeting is easily achieved in companies that have good corporate governance structures.

Visit http://www.business-competence.com for great resource on business management.

Tags: best, Budgets, Business, Developing, Practice

Budgeting Money Is Stressful ? Get Some Budgeting Tips To Make It Easier

Let me ask you a few questions before we discuss budgeting money.

Are you habitually running out of money before the month is over?
Are you unable to save any money at all out of each paycheck?
Are you operating without a monthly budget?

If you were able to yes to one or more of these questions, it is time to learn about budgeting money so that you can get your spending habits under control.  Most people don’t want to learn about budgeting money because the process just seems so hard.

Common arguments against budgeting money:

It’s too hard to do.
It takes too much time.
I could never stick to one so why bother.
I don’t know how to create a budget.

Even thinking about budgeting money makes most people feel uncomfortable and brings up a ton of less than pleasant feelings. 

What do you feel when I say the word “budget” or when I tell you that it is imperative that you set up a personal budget because budgeting money is the only way to gain financial freedom?

Stress
Anxiety
Fear
Anger
Deprived

Do any of these feelings ring a bell for you?  I know that they do for me too.  I have a personal budget but I still feel anxious just talking about creating a budget. The entire process of budgeting money can be a total mystery to a lot of people.

However, budgeting money doesn’t have to be any of these things.  It is time that you took control of your money and quit letting it control you.  Running out of money all the time is a serious problem and that should be more stressful to you than the thought of planning a personal budget.  Wouldn’t you love to experience the feeling of having money left over at the end of the month?  Wouldn’t it be great to know that you were not going to run out of money any more?  How great would you feel?

The key to planning a personal budget without stress is to break the whole process down into smaller steps. Looking at it as one big project can be very overwhelming.  At this point, don’t worry about how you will ever stick to a budget.  Let’s just talk about how to get a budget set up.

First, before you can do any planning at all, you have to know where your money is going.  Since most people don’t keep all of their receipts all the time, it can be difficult to go back and try to track where you money has been. The easiest way to tackle this step is to keep every receipt for the next month so that you can track every penny you spend.

Then, at the end of the month, sit down with all of your receipts for a month and categorize where your money has gone.  There are going to be things like your mortgage or car payments that will be the same every month which makes it easier.  But other expenses will vary and you will need to place them in categories like:

Mortgage – Rent
Utilities
Gas
Insurance
Groceries
Entertainment

Obviously, there are lots of other categories but these are some of the basic things that you will need to track just to get your started.  The key to getting a budget that you can stick to is to know exactly where you are spending your money every month.

The third step is to take your monthly income and subtract all of your monthly expenses that you just figured out.  You will then know if you have money left over every month or is you are spending more than you make every month.  If you have extra money every month, then you can pat yourself on the back.  But, if you are spending more than you make every month you have a serious problem and steps must be taken to reduce your spending and bring in more money.  If you don’t, your debt will grow every month and soon you will be buried so deep that it will be hard to recover.

The fourth thing is to create a budget using your income and your expenses and stick to it.  This is easier said than done.  It helps if you set up short term goals and long term goals that you can look at every day.  Knowing you have goals that you are saving for makes it easier to not spend your money on a whim.

The fifth thing you must do is to stop impulsive spending.  This can be very hard to do especially since your spending habits are so ingrained.

Budgeting money makes most people shudder with dread because they think it will limit some of the pleasures in their lives.  But the opposite is actually true.  By controlling your money, you can spend your money on those things that bring you the most money instead of just frittering your money away every month.

We have just touched the tip of the budgeting iceberg and there is more to it than we have covered here.

Tags: Budgeting, Easier, Money, Some, Stressful, Tips