Accounting software programs are all automated programs that help record and report the

organisation’s financial transactions. Most organisations today use accounting software to manage their
financial transactions. The software makes it more convenient to help prepare reports. These programs
prove beneficial in assisting in budget preparation and monitoring. They maintain data on past
performance, providing valid information for preparing estimates. As they track all transactions, they
provide reliable data for monitoring performance against the budget.

Xero

– Key features include:

Track financial performance

Create summary reports

Track billable invoices

Track purchase orders

Estimate costs and expenses

Manage bills payment

Connect with bank accounts

Some functionalities that are particularly useful when preparing and monitoring budgets include the
following:

As Xero helps track financial performance, it provides valuable information on income and expenditure
for previous periods. You may use this information to form accurate and reliable estimates for the
budget period. It will provide accurate data for the current period that you can use to monitor
performance against budget.

As Xero enables feed from bank accounts, it helps ensure that your bank balance information is accurate
and reliable. It helps prepare the budget with valid and reliable information. It is also helpful while
monitoring the budget.

MYOB

– Key features include:

Track performance against budget

Generate reports

Cash flow management

Invoicing

Create estimates

Tax compliance

Some functionalities that are particularly useful when preparing and monitoring budgets include the
following:

MYOB allows you to enter budget figures for individual accounts. It proves helpful in tracking
performance against budgets. MYOB Essentials feature will enable you to set goals, review the
performance and identify areas that have variances.

As it helps create estimates based on existing data, it is handy when you develop your budget.

QuickBooks Online

Key features include:

Profit and loss reporting

Balance sheet reporting

Payment tracking

Estimate creation

Expense management

Expense tracking

Some functionalities that are particularly useful when preparing and monitoring budgets include the
following:

It helps in expense management and tracking. You can monitor the expenses against your budget.

As it helps create estimates based on existing data, it is handy when you develop your budget.

Data like customer research will help you understand trends and shifts in customer consumption
patterns. For instance, your research may show that customers prefer to search for and book their stay
in hotels using online tools. You may, based on this, need to budget for integrating your hotel booking
systems with platforms provided by travel aggregators. You may even decide to budget for improving
the user experience on your hotel’s website.

You may use the results of the competitor research to understand more about their offering and pricing
strategies. Suppose the travel companies in your competitive category offer special deals or innovative
services. In that case, you will need to match or better that. This will ensure your revenues are not
impacted. It may require you to budget additional expenses for promotions or service improvements.

Analysis of supplier research or financial information will provide insights into their pricing strategies or
long-term viability. You should analyse data relating to alternate suppliers and vendors. This will enable
you to develop additional suppliers for the items that form a significant component of your expenses.
For instance, linen, toiletries, and cleaning materials contribute significantly to your housekeeping
budget expenses. Ensuring the best price and uninterrupted supply for these components will help you
manage your budget expenses.

The Australian Government provides grants and support to help Australian tourism businesses succeed.
You may have identified that your travel business is eligible for help or government-sponsored
incentives. You should study the details under which these grants and support are provided. For
instance, you can visit the website of The Australian Trade and Investment Commission (Austrade) to
identify and analyse if you are eligible for funding and the applicable conditions of the grants and
support.

You need to study management policies and procedures to understand their impact on budget
assumptions. You need to take inputs from all departmental, event or project budgets. You need to
understand if there are any planned initiatives in different areas of operations. For instance, you may be
preparing the budget for a restaurant business that operates in multiple locations. If one of the locations
has a planned renovation, you need to consider that while preparing the draft budget.

Similarly, the human resources department may have planned to train the service staff. One of your
restaurants may have planned an event coinciding with a local music festival. The impact of these needs
to be studied and incorporated into the budget.
Performance information from previous periods provides a solid foundation for your assumptions and
estimates for the budget period. You need to gather all relevant current and historical data. You can
undertake ratio analysis and identify trends. Keep a detailed listing of your assumptions based on the
ratio analysis that may be carried out and trends observed. You must ensure that these assumptions and
parameters align with your organisational policies and procedures and comply with regulatory
requirements. Your premises should be realistic and not conservative, pessimistic, or optimistic. You
should follow the guidelines issued by your organisation for budget preparation.

Steps that you may take to draft the budget according to the analysis of information may include:

Identify internal and external factors

Access and gather relevant data

Analyse the data and factors

Consult with coworkers

Arrive at assumptions to use for estimates

Estimate income and expenditure

Prepare draft as per organisational formats and policies and in line with objectives

Ratio analysis is a method for analysing an organisation’s financial statements, like the income and
balance sheets. It helps understand the organisation’s liquidity, profitability, and operational efficiency.
It helps identify trends over time. You can use these to base your estimates for the budget you will draft.

Trend analysis is the process of comparing business data over time to identify any consistent results or
trends. You can then develop a strategy to respond to these trends in line with your business goals.

Techniques used to analyse available information may vary according to your organisational
requirements and the accounting software programs used.

Some common techniques that can help improve the efficiency and effectiveness of your analysis are as
follows:

Step 1

Use integrated analysis techniques within accounting systems.

Step 2

Employ the use of digital technologies and reports to help in detailed analysis.

Step 3
Learn how to efficiently navigate reports.

Step 4

Have an in-depth knowledge of your operating systems and software.

You have analysed the external and internal factors that may impact your budget. You have also studied
the information relating to past performance, suppliers, competitors and customers. Now you need to
use the results to help you estimate income and expenditure for the budget period. You should ensure
that you support your estimates with valid, reliable, relevant information.

Income is the amount of money or transfer of value that the organisation receives in exchange for goods
and services it provides. Expenditure is the amount of money it spends to provide these goods and
services, directly or indirectly. It includes both capital and operating expenses. Income and expenditure
are crucial for determining the profitability of the organisation. Your budget and operations should aim
at maximising income. It would help if you managed expenditures or expenses. The aim should not be to
minimise costs but to ensure that all payments maximise value for your organisation. For instance,
reducing expenses on training your frontline staff in a hotel or restaurant or tour guide operators for a
travel business will result in short-term expense minimisation. Still, they will harm your business in the
long term as travel, tourism, hospitality, and events are services industries. Quality of service goes a long
way in defining customer loyalty and long-term sustainability and profitability. A surplus of income over
expenses is the profit of the organisation. When total costs are greater than the income or revenue, the
organisation will make a loss.

Assume you are preparing a budget for a hotel in a hotel chain. To estimate income and expenses, you
may use a range of information, including:

Past historical data

Data from other hotels in the chain

Industry-wide standard operating ratios

Industry benchmarks

Operating data from comparable properties

Assumptions based on economic cycles or market conditions

Details from various departments about their plans

Supplier information

You need to ensure that you support your estimates with information that is:

Valid – Information is appropriate to the objectives of the budget and the estimates you will be
preparing.

Reliable – Information is based on facts and from sources you can trust.

Relevant – Information is material to making the estimates.

Techniques that you may use when estimating income and expenses may include:

- Estimates based on SMART goals

SMART goals are specific, measurable, achievable, realistic and time-bound goals. You can use the
objectives of your organisation to base your estimates on them. For instance, the objective may be to
increase the revenue by 10% within one year. Using this technique, you should look at the previous
year’s revenue and estimate the budget revenue as:

Budget Revenue = Previous Year Revenue x1.1

Then you should estimate the expenses that will assist you in meeting this goal. For example, you may
need to budget for an additional marketing or promotional cost to increase your room occupancy or the
number of covers in the restaurant.

- Analogous estimates

It is also known as top-down estimating. This technique relies on your experience, information on similar
initiatives, or historical data from previous years or projects to determine the expenses incurred in the
budget year. It may also rely on estimating revenues based on comparative organisations’ data. This
method bases its estimation of a comparable parameter for future activity on the values of parameters
from past data. This estimation method is used when there is insufficient information available. For
instance, it may be for the launch of a new outlet or a project.

- Parametric estimates

This technique uses historical data to calculate costs and revenue, along with statistical data. It is
generally considered a better way to estimate compared to analogous estimates.

- Three-point estimates

This technique is used to reduce uncertainties in estimating assumptions. Rather than one estimate,
three estimates are determined. Their average is taken to reduce the uncertainties, risks, and biases.
You may obtain these estimates from subject matter experts. You can get optimistic, pessimistic and
most likely estimates from these experts.
 - Bottom-up estimates

This technique, while most accurate, is time-consuming and costly. In this technique, you get each unit
to determine its costs based on its objectives. Then it is combined to get the expenses at the
organisational level. You then estimate the revenue to justify the costs.

You must have:

A clear understanding of the purpose and audience of your estimates

Knowledge of the critical drivers of financial results for the organisation

Some knowledge of accounting and financial statement analysis

Skill in using spreadsheet software such as Microsoft Excel

Creativity, attention to detail, and good judgement

Start by estimating your organisation’s annual revenue based on the business activities it will
implement. Please note that while the discussion talks about the organisation, it may be only for the
department, project or event, based on your budget type. Income for a travel organisation may include
consultation or service fees it charges its customers. It may also take a commission from airline
companies, hotels, cruises, and other service providers. Income for a hotel will include room rentals and
food and beverages charges, to name a few. Restaurants make income from dining services, takeaways
and catering and events. Income for an event may depend on the number of delegates attending a
conference.

To estimate revenues or income, you may take the following steps:

Identify the business activities that are planned for the year ahead based on the business strategy in
your organisational strategic plan.

Estimate your organisation’s annual revenue based on the business activities it will implement.

Factor in any pricing revisions that are exepected to be made.

Take into account the cyclical trends in demand, if any, based on previous year analysis.

For instance, while creating the budget for a travel agency’s domestic travel division, you must consider
which aspects of the organisation will most likely change during the upcoming budgeting period. The
division managers and their teams must answer several questions like the following. What sales will
increase if an increase in sales is the overall objective? How many more tickets must the division sell to
reach the goal? Does the division prioritise tours? Is the external information on the actions of other
tour providers accurate? Is the source reputable?
Budget expenditure includes operating expenses (OPEX) and capital expenditure (CAPEX).

Operating expenses are the expenses an organisation incurs for purchased and consumed assets during
the same financial year. They are the day-to-day expenses incurred by organisations to remain
operational.

This includes both of the following:

Direct operating expenses are the cost of sales, e.g. the cost of frontline and housekeeping staff for a
hotel.

Indirect expenses or overheads are the costs incurred irrespective of the room occupancy or number of
customers served in a restaurant. They may include electricity costs, advertising expenses, and
administrative staff salaries.

On the other hand, capital expenditure or CAPEX is the expenditure an organisation needs to incur to
sustain and expand its business over a more extended period. Thus, an organisation’s capital
expenditure can include the purchase of land, furniture or equipment and upgrades to or replacement
of existing assets. Capital expenditure is a critical decision requiring evaluation between options that
carry benefits and risks to the organisation. The cost of undoing this decision can be very high.
Additionally, the returns from this may come in after a lag.

In contrast, the operating expenses associated with it start almost immediately. One example is the
purchase of land for setting up an additional hotel. The hotel will take time to be operational, whereas
operating expenses like property taxes will commence immediately. Later in this chapter, you will learn
about the evaluation of the options.

After estimating the income, the next step is to assess the associated costs. These will be the expenses
or expenditures associated with the unit’s activities.

To understand this better, assume you are preparing the housekeeping department’s budget for a hotel.
You should first obtain the estimated occupancy rates from the front office. If the occupancy rate is 80%
and there are 100 rooms, you need to budget for expenses for 80 rooms.

Then you should list all expenses to support the occupancy level. Typically, costs from prior periods
serve as the beginning point. You can adjust them for changes in the environment. Use operating ratios
to estimate the costs for the budgeted occupancy levels. You need to calculate the capital costs and the
operating costs.

List the capital expenses that you may need to incur. This may include any equipment like new vacuum
cleaners, etc. The cost of uniforms for housekeeping staff and linen required for the requisite number of
rooms will also be included under capital costs. Obtain estimates for the same from different suppliers
so that you may budget more accurately.

Next, look at the previous years’ data on operating efficiency. Calculate the number of housekeeping
staff you need to clean the required rooms. This should consider the average salaries for housekeeping
staff and the number of rooms one member can clean daily. The number of rooms will depend on
average break times, holidays, weekly offs and hours in a work shift. Salaries are the most significant
contributor to a hotel’s operating budget and must be estimated carefully.

Operating costs may include the following:

Training expenses

Utility expenses

Cost of services

Consumables costs

Utility expenses will consist of costs like electricity, telephone and internet. Services used by the
housekeeping department may include pest control, repairs, and white goods servicing, to name a few.
Consumables costs will comprise expenses on flowers for the rooms, cleaning materials and toiletries.

You should prepare a budgeted Income and Expenditure Statement. This is also known as a budgeted
Profit & Loss (P&L) Statement. Using the estimated annual revenue and expenses, prepare budgeted
monthly budgets for the next 12 months. You can use your organisation’s accounting software (covered
in the previous subchapter) or a simple Microsoft Excel spreadsheet.

Below is a sample Income and Expenditure Statement budget showing the calculation of the profit and
loss for a hotel.

Budgeted Profit and Loss (P&L) Statement for the period DDMMYY to DDMMYY

Revenue Total Revenue A

Room rents
Food and Beverage
Business centre
SPA and other facilities
Events and Conferences

Cost of Sales Total Cost of Sales B

Salaries
Cleaning
Budgeted Profit and Loss (P&L) Statement for the period DDMMYY to DDMMYY

Laundry
Food and beverage cost
Consumables cost

Gross Profit (Loss) C=(A-B)

Other Income Total Other Income D

Sale of Assets

Expenses Total Expenses E

Indirect Expense
Interest Expense
Depreciation
Taxes
Other Expenses

Net Profit (Loss) F=C+D-E

When preparing budgets, people are often overly optimistic about the future financial results of the
organisation or department. This enthusiasm could cloud their judgement, leading to problems. For one,
they could underestimate the time it takes to get things down and its cost. You need to ensure that you
are as realistic about the prospects as possible to make reasonable estimations. You can base your
numbers on research, or you may speak with others in the same industry or connect with professional
and industry bodies.

You must base your estimates on valid, reliable and relevant information

Valid information is appropriate to the objectives of the budget and the estimates you will be preparing.
You must ensure that the information you have used is pertinent to the estimates. For instance,
information about the rising cost of venues will be valid information for expense estimates for an
organisation that does events.

Reliable information is information based on facts and from sources you can trust. It should be accurate
and complete. Information taken from credible sources will be more reliable. For instance, estimates
based on your organisation’s historical performance and published industry trends will be more accurate
than those based on your gut feel.

Relevant information is information that is material to making the estimates. It should be essential and
pertinent information. For instance, when estimating your hotel’s income, past information about room
occupancy trends is relevant in supporting your estimates for future revenue.
You must keep a list of assumptions you made when you estimated the income and the expenditure.
You should also cross reference it with the information and data source you used. It will act as a
reference point for you and your co-workers. It will also help you answer questions when you are
negotiating and seeking approval for the budgets. Chapter 3 will explain negotiations and approval in
greater detail.

When preparing your draft budget, an essential point that you must consider is organisational
objectives. You must also consider the business needs of the organisation. You will understand the
specific business needs during your consultation on various components with colleagues. This
consultation should occur both in the planning phase (as covered in Chapter 1) and when you seek input
on the draft budget. The latter will be covered later in this chapter.

The draft budget is the preliminary budget you have prepared per the guidelines given in the previous
subchapters. Once finalised, you will present the draft budgets for finalisation and approval. This way,
your final budget will align with your organisational objectives and reflect business needs.

Organisational objectives are the identifiable and measurable goals towards which all organisation
activities are directed. They are the basis for all functions and decision-making of the organisation. These
objectives may be short-term, medium-term or long-term goals.

This subchapter will explain the importance of aligning your budgets with the organisational objectives.
It will also provide guidance on ensuring your draft budget reflects these objectives.

Organisational objectives are the articulation of the primary purpose of the organisation. They help:

Provide guidelines to the employees about the goals of the organisation

Guide decision-making

Identify and resolve conflicting priorities

Coordinate activities of different departments

Ensure accountability of employees

Organisations usually develop mission statements that articulate their objectives. They then base
business strategies on these objectives. These strategies should act as the critical component when you
establish the budgets. This way, it can guide you in allocating resources to meet those objectives. It
ensures that all activities of various departments are coordinated and directed towards achieving these
objectives.

A draft budget that does not align with your organisational objectives may not be approved. Even if it
gets approved, it will be inefficient in utilising scarce organisational resources. The organisation may fail
to meet the purposes that it has set out for itself. Unless the budget and the objectives are aligned, the
organisation will not achieve its vision. When you draft your budget, align it with your strategic goals and
base it on reliable information.

You should draft the budget considering your organisational objectives. You may get the details of your
organisational objectives from your website or the human resources department. You may even get
details on the same by seeking a consult with your organisation’s senior management. Then you should
ensure that you have based your assumptions and estimates on the same. Your list of supporting
assumptions, discussed in the previous subchapter, should also clearly specify the assumptions made for
incorporating these objectives into your budget.

For instance, one of the objectives for your hotel is to grow room occupancy rates by 10% every year.
This growth will require extra staff, consumables, and increased marketing spend. You will need to
prepare a budget showing increased room sales and the associated expenses required to achieve the
increase.

Similarly, suppose your travel company’s objective is to migrate all tour bookings to your website. In
that case, you should incorporate costs for promoting and using online channels, not for a large physical
sales force, in your budget.

As covered previously, preparing the budget involves cooperation from all organisational levels.
Managers and other relevant personnel from each department provide information so that you can
produce draft budget proposals. It then goes through a process of evaluation and modifications. The
senior management will approve or ask for improvements before agreeing with the same. After your
budget is approved, you need to share it with relevant employees and external stakeholders for
implementation and monitoring.

You need to finalise your budget recommendations based on your detailed analysis, feedback, and
insights gained during the consultation with the relevant stakeholders. You may have different options
based on your analysis that you will need to assess to make justifiable recommendations for your
budget expenditure.

Options are alternatives that may present themselves to you for making a choice. You will need to study
the pros and cons of each option and arrive at your recommendations. Recommendations are the
proposals supporting options based on your comparison of the various alternatives. Presenting options
and recommendations in a clear format is essential to obtain the approvals. A clear format implies an
easy-to-understand template with a logical structure and presentation methods suited to the audience.
This subchapter will explain how to assess and present these budget options in a clear format. It will also
explain how to present your budget recommendations.

While assessing the various budget information, you will face alternatives that you will need to evaluate
and decide which one to recommend.

Some examples of options that you will deal with when preparing your budget may include:

Allocation of resources between departments or activities

– It can involve deciding whether to allocate funds for a training program or a promotional
activity. For instance, should you budget for service and quality training for your frontline staff
or earmark the funds for a sales promotional activity? It requires prioritisation between
conflicting requirements.

Purchase or lease furniture, fixtures, equipment or properties

– As a part of your business expansion objectives, you need to open two new
properties. Should you acquire the land outright or lease an existing property?
Should you buy air conditioners and vehicles required for the new property or
hire them?

Selection between suppliers and vendors

– It may involve whether to conduct an activity in-house or outsource the activity. It

can also require selecting between multiple suppliers.

You can assess the options and arrive at your recommendations by following the steps
below:

Identify various options associated with the decision

Assess and shortlist the top options

Prepare your recommendations and business case

Present your recommendations and business case

Below are some techniques you may use to assess the options and shortlist them:

Cost–benefit analysis (CBA)

Impact analysis

Risk analysis
CBA is a process where you compare the estimated costs and benefits of different
alternatives to inform decision-making. It is a quantitative analysis based on data. It
directs you to uncover indirect costs and intangible benefits. When the estimated
benefits outweigh the estimated costs, an option is viable. You may select the one that
offers the highest cost–benefit to choose between different options. This analysis will
help you allocate resources to those options where the benefits outweigh the costs.

Impact analysis

It is a more subjective assessment of the options or alternatives. You study the benefits
and drawbacks of each option

To understand the impact of the various choices, you need to answer questions like:

Which option aligns more closely with the organisational objectives?

Which option has a broader impact on the employees and profitability?

Risk analysis

While risk is the cost of doing business, some alternatives may carry more risk.
Analysing the risk associated with each option is critical, especially when making capital
expenditure budgets. For instance, a tour company may grow by increasing customers
in the existing locations, expanding to new places, or venturing into new lines of
business. You need to evaluate these alternatives and the risks and benefits of all
options. As discussed earlier in this chapter, capital expenditure is a critical decision.
The cost of undoing this decision can be very high. Additionally, the returns from this
may come in after a lag. In contrast, the operating expenses associated with it start
almost immediately.

To formulate your budget recommendations, you must do the following:

1 Consider all related costs, the market expectations, organisational objectives and
proposed business growth.

2 Take inputs from various departments. The people who run the day-to-day operations
are in the best position to assess what is required to be purchased or what is obsolete
and needs replacement. This bottom-up approach will help you evaluate the need for
capital expenditure.
3 Assess whether CAPEX is necessary for long-term growth, what is economically
viable, and what the return on investment will be. It would help if you looked at the
financial and non-financial benefits of the expenditure you are proposing.

Indicators that you can use for this assessment include the following:

Return on investment (ROI)

– ROI is a key metric that helps determine profitability from investments. In the
context of assessing budget expenditure, it helps evaluate between different
options available to an organisation. Organisations can use it in making decisions
like whether to purchase equipment or lease it or to choose from which supplier
to purchase the capital asset. Since ROI is expressed as a percentage, it helps
rank different investment options in order of expected returns. There are many
ways to calculate ROI. They may include:

Cost–benefit analysis

– Using this analysis technique, you can assess which investments to make and
which to forego. It helps you arrive at a proper evaluation before finalising your
expenditure recommendations. It involves comparing the costs of the proposed
investment option to its benefits. It can also factor in the opportunity cost or
alternate benefits that could accrue by choosing another option.

The process of conducting a cost–benefit analysis broadly consists of the following

steps:

Identify the direct, indirect and opportunity costs and cost of risk.

Identify the benefits, including higher revenue and market share gains.

Quantify these in monetary terms.

Adjust for the time value of money to arrive at the cost-benefit.

Payback period

– It is the amount of time to break even or recover the cost of your investments.
Shorter payback periods make the proposed investments more desirable than
those with a more extended payback period. You may calculate it as:

Payback Period = Budgeted Expenditure ÷ Estimated Annual Net Cash Flow

The main concern with using this assessment indicator is that it does not consider the
time value of money (TVM). Additionally, it ignores the cash flows after the break-even;
hence, it does not consider the total profitability of the investment.

Non-financial and intangible benefits

– A vital assessment indicator can be the non-financial or intangible benefits of the

capital expenditure recommendations. Below are some of the benefits:

Reputation and goodwill

Expenditure needs evaluation in terms of environmental, social and governance (ESG)

criteria that are gaining prominence. Socially responsible capital expenditures may not
have a financial or tangible benefit. Still, they improve the organisation’s reputation and
goodwill with the community as a socially responsible and contributing member of
society. For instance, a hotel may decide to replace existing equipment with energy-
saving equipment or introduce a solar-powered electrification program.

Employee morale

Often, the replacement of obsolete assets helps in productivity and reduces your
operating expenses in repairs and maintenance. They may also help reduce operating
errors. It has a positive impact on employee morale.

Supplier and investor confidence

Capital expenditure for expansion and growth can boost supplier and investor
confidence.

Contractual and regulatory compliance

Some expenditures may help comply with contractual and legislative requirements.

4 Assign budget priorities to the different options based on the alignment of each
proposal with the organisational objectives’ priorities.
5 Arrive at your recommended option based on the aforementioned analysis and the
priorities.

Given below are some guidelines to help you present your options and
recommendations:

Explain in a clear and easy-to-understand manner

Provide details of all options considered and support them with an explanation of your
analysis

Clearly outline your recommendation and the rationale for arriving at it

Use organisational templates and follow organisational policies and procedures

Ensure the template you use is suitable for the type of budget format used

The format for presenting the budget and budget recommendations you use will depend
on the budget format. The budget format includes the structure used in preparing and
presenting budget information. Budget information is the information required to justify
budget recommendations. They are based on the kind of questions that need to be
answered during the budget review process.

Given below are some of the standard budget formats:

Budget Formats Purpose of These Formats

It is used to monitor expenses, sales, and

revenue, which helps organisations
achieve optimal financial performance.
Static budgeting Keeping each department or division
within budget allows organisations to
remain on track with their long-term
financial goals.

It is used to allocate finances based on

Zero-based budgeting program efficiency and necessity rather
than budget history.

It is used to evaluate relative performance

Performance budgeting for predetermined outcomes based on
target accomplishment.

Incremental budgeting It is used by utilising the actual

performance for the current period and
Budget Formats Purpose of These Formats

then making incremental adjustments. It

adopts the stance of raising each budget
component annually by a specific amount.

It is used for tracking the resources

allocated to a project and deciding how to
Program budgeting
use them to achieve the company’s
objectives.

After you have prepared the draft budget, you should circulate it to colleagues and
managers for their input. Chapter 1 covered consultation with colleagues in detail. The
review and comments from your colleagues will help you identify gaps in your analysis
and preparation. You will be able to correct this before you seek approval from the
budget approving authorities. You will be able to validate the information used and the
assumptions made. It will help you ensure the accuracy and relevance of the draft
budget. The kind of questions that your colleagues may ask will help you prepare for
questions that the approving authority might raise

The colleagues you may circulate the draft budget to may include experts within your
organisation in preparing budgets or technical experts. You may also distribute to key
departmental managers to validate your assumptions and the information you have
used. They will be able to provide valuable feedback, whether for creating additional
revenue or cost savings. You should also seek input from your manager. There may be
information your manager has from a senior or executive management position that you
are unaware of that may affect your budget or recommendations.

Some common forms of circulating the draft budget may include:

Meeting

You may call for a meeting with relevant departmental managers and key experts. You
may present a budget summary with your assumptions, methodology and
recommendations. You should start the discussion by outlining the expectations from
the meeting and desired outcomes.

Consultation
You may seek a consult with your manager or crucial experts to present your summary
and seek specific inputs.

Email

You may send the draft budget to concerned colleagues via email. You should specify
that it is a draft and articulate your expectations from the recipients and the timeframe
for receiving their input.

cloud-based file management system

You may share your draft budget with relevant colleagues and managers via your
organisation’s online platform. You must ensure that the access is restricted to only
those from whom you seek inputs.

You must keep the following points in mind when circulating the draft budget:

- Ensure organisational guidelines on confidentiality are maintained

You should control the circulation list. Be mindful that this information is confidential. It
should be stored securely and shared discreetly.

- Ensure the draft document can be clearly identified as a draft

You may mark it as ‘Draft-For review only’ to prevent unintentional confusion with a final
approved budget.

- specify the timeline by when you expect to receive comments and inputs

People are usually busy with their own responsibilities. Unless you specify a timeframe,
you may not receive their response promptly.

- Specify what type of inputs you are seeking

Articulate your expectations clearly. It will assist in receiving focused inputs.

After you receive the inputs, ensure you review them and incorporate them into your
draft as necessary. In case of any disconnects, seek a follow-up meeting to clarify the
issue.

A budget schedule is a schedule of budget activities prepared to help complete the

activities within stipulated timelines. Adherence to this schedule is essential as delays
may result in the organisation overspending or delays in the start of critical initiatives.
Suppose the budget preparation and approval are not done on time. In that case, it will
become difficult for operating units to make course corrections later. Critical equipment
may not be purchased on time without approvals, resulting in revenue loss or additional
expenses. Delays in preparing and finalising the budget may ultimately impact meeting
the organisation’s goals. Budgets need to be completed in adequate time for them to be
implemented.

You need to be mindful of your budget schedule to ensure that you have the draft
version ready per the schedule. You must follow up with relevant colleagues if you do
not receive their inputs in time. After you receive their input, you must incorporate the
feedback promptly.