Sales management

Sales ManagementBAM- 402

Submitted by:

Hina Varshney

B.Com (IV Sem)

12D012

Topic: Sales Budget & its process

What is sales budget?

A sales budget is a necessary component in every company's corporate backbone in order to predict accurate sales forecast and profitability. Having an effective financial plan in place helps management decide on inventory, pricing and allows them to set future goals to promote profitability.

DefinitionA sales budget is a spreadsheet which documents monthly, quarterly and annual budgets as well as financial goals, expressed in currency and units of production. It's crucial to the business that the sales budget is maintained and accurate because if information is missing, this negatively affects the rest of the budgeting process.

Objectives of sales budget

• Future planning• Control on selling expenses• Control on sales operations• Measurement of performance

Sales budgeting process• Preliminary conference for analyzing

the situation: it is the first step for the preparation of sales budget. Representatives from different sales region, territories etc. are invited to attend the meeting. The conference should discuss the present situation in the light of past experience along with current problem. Positive & negative points are discussed.

cont.…

Sales budgeting process

• Development of sales forecast: on the basis of conference, the sales manager should take up the task of sales forecasting for the next budgeted period. Sales forecasting is the very core function of sales budgeting procedure bcoz it determines not only the sales revenue but also the appropriate level of effort made.

cont.…..

Sales budgeting process• Sales objectives & sales targets:

after sales forecasting, the sales manager should take necessary steps as to formulation of sales objectives & sales targets. These should be based on practical approach rather than the theoretical approach.

• Division & sub- division of sales targets: the next step taken by sales manager in connection with budget processing is to divide & sub divide the sales targets product- wise.

Sales budgeting process

• Fixing priorities: fixing priorities is an imp step in the sales budgeting process. It requires deep study of the market.

• Determination of sales activity: under, this step the objectives & sales targets are to be translated into various activities which are to be carried by sales mgmt. & sales force so as to achieve the objective & targets in stipulated time.

cont.…..

Sales budgeting process• Resource requirement: the next step

in budgeting process is to spell out the resource necessary to carry out the various activities in implementing the sales plans & thereby to achieve the desired objectives & targets.

• Finalization of projection: afterwards, the manager should finalize the projection in the light of available resource & targets so fixed. It requires a close coordination b/w these three: resource, objectives & targets.

cont.…..

Sales budgeting process• Presentation & review: as soon as

the sales budget is finalized by the sales dept., it should be presented before the top mgmt. for necessary review & approval. The top mgmt. should examine the budget proposals in the light of available financial resources, personnel resources, production capacity, cash resources & the expected results.

• Revision of sales budget: the sales manager should revise the budget in the light of suggestion made by the top mgmt.

Sales budgeting process

• Approval of sales budget: the sales manager now submit the duly revised sales budget before the top mgmt. for final approval. After giving the consideration to each & major item of the sales budget, top mgmt. will accord his approval by signing the same & one copy of the same will be returned back to the sales manager for implementation.

In this way the sales budget will now take the final shape.

Reference • www.ehow.com • www.ask.com • www.preservearticles.com • DEI Study Material