Effective Budgeting, Cost Control and Overhead Reduction in an Economic Downturn

Introduction

Very much like when the rocks below the sea become visible when the tide goes out, high levels of organisational overheads are exposed during an economic downturn, the result of which is lower profit levels and possibly losses. The position may be acceptable within the short term, but if such a situation continues over an extended period it is an obvious threat to economic survival. This therefore requires an assessment of the level of necessary overheads and other resources required to support lower levels of economic activity.

The budget is a plan of how resources may be economically acquired and allocated over the short term (up to one year forward). Effective budgeting recognises changes in the external economic environment, such as an economic downturn, and then identifies the areas in which appropriate responses are required to prepare a financially viable plan.

This training seminar deals comprehensively with these issues in plain language that is easy to understand. It covers in detail how alternative costing systems are used in budget preparation. It also explores alternative approaches to costing, and budgetary control that may more accurately identify individual areas of overhead and determine appropriate levels of overhead, materials and labour resources to support reduced levels of activity.

The Instructor's own commercial career experiences and many other real-world business scenarios are shared throughout this stimulating training seminar to illustrate and reinforce the practical application of the tools and techniques and best practice.

This training seminar will highlight:

• Effective budgeting and performance measurement
• Full costing, marginal costing, and activity-based costing (ABC)
• Operating budgets, cash budgets, and master budgets
• Fixed budgets, flexed budgets, and variance analysis
• Continuous performance improvement, and the balanced scorecard

Objectives

By the end of this training seminar, participants will have learned how to:

• Identify the links between financial planning, budget setting, and performance measurement
• Use alternative approaches to costing for planning, budgeting and budgetary control to identify specific overheads and their appropriate levels
• Prepare an operating budget, cash budget, and master budget
• Develop budgetary control systems, and analyse variances using flexed budgets
• Integrate continuous performance improvement into the budget process and link budgets and KPIs with financial plans using the balanced scorecard

Training Methodology

Individuals with varied experience and knowledge are encouraged to share their own experience and consider alternative approaches introduced during the training seminar. Formal presentations will be supported by numerous worked examples, the use of real-world scenarios and group discussion. In this supportive and interactive workshop environment, your Instructor will facilitate team case studies and exercises that will reinforce the hands-on application of each of the learning points and topics covered.

Difficult mathematical concepts are minimised wherever possible and handled in a visual and user-friendly way – our aim is for this to be an enjoyable learning experience.

Organisational Impact

Participants in this training seminar will provide benefits for their organisation from the skillset and enhanced knowledge that they will take back to the workplace:

• Understanding of the annual budget setting process and its links with the organisations longer-term plans and financing requirements
• Choosing the most appropriate approach to costing for more accurate planning and budgeting, and improved control of overheads
• Applying effective budgetary control using flexed budgets and variance analysis, and the balanced scorecard, and identifying ways the organisations budget process may be improved
• Communicating more effectively with other professionals and sharing knowledge gained from the seminar throughout the organisation

Personal Impact

Participants in this training seminar will greatly improve their understanding of the links between the financial planning and budget setting processes, and develop their application of budgeting and budgetary control best practice through:

• Developing their ability to prepare successful financial plans and budgets and determine the financing requirements of the organisation
• Comparing fixed and variable costs, direct and indirect costs, and the use of contribution accounting and cost/volume/profit (CVP) analysis
• Applying traditional and activity-based costing (ABC) methods and allocation of overhead costs for financial planning, budget setting and budgetary control
• Using the appropriate techniques of preparation of departmental budgets, the master budget, and cash budget
• The use of standard costing in budgetary control using flexed budgets and variance analysis, and the balanced scorecard, and evaluating ways of improving the organisational budget process