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Rolling Financial Budget for Service Companies
What will happen in the next quarter?

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File Size: 140 KB
Date Added: October 2003
Requirements: Microsoft Excel 97 and higher


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This quarterly rolling financial budget for service companies spreadsheet will help you plan your financial budget for each quarter.  The rolling budget spreadsheet is designed for businesses that deliver services and do not carry any inventory.

The spreadsheet facilitates the setting of benchmark gross profit and net profit margins from leading competitors in the industry.  As a result there are no fixed targets to meet but rather an average set of profit margins that must be maintained or beaten.

A cost to activity allocation table allows expenses to be allocated to various business activities.  The idea behind this method is to allocate additional resources to activities that is crucial for achieving the companies long term goals.

The spreadsheet contains a main menu page for easy navigation.  Sample figures are shown in blue and can be changed.  There are several macro's built into the spreadsheet and the entire roll forward of the budget for the next quarter can be done by the press of a single button.

There is also a free online user manual.

The Traditional Approach to Budgets
  • Budgets are prepared annually
  • Top management determines budget goals
  • Budgets are used as a control tool
  • Focus on cost reduction
  • Separates planning and execution
  • Bad news hidden or camouflaged
  • Fixed targets
  • Introspective and based on previous performance

Behavioral Implications of the Traditional Approach

  • Anticipated revenue understated
  • Planned expenses overstated
  • Low morale
  • Budgets are used as a pressure devise
  • Induce competition among departments
  • Managers see the budget as a sum of money that has to be spent.
  • Overspending in the final quarter if there are favorable differences.
  • Cost are exaggerated to achieve planned expenditure
  • Successful manager is the hardest negotiator
  • A great deal of time and energy is wasted on preparing the budget
  • Where there is overspending, costs are moved around and disguised
  • Manager is likely to adopt a conservative approach to new business opportunities

A New Approach to Budgeting (this spreadsheet)

  • Rolling budget prepared per quarter.
  • Business can react quicker to changes in the business environment.
  • More discretion for line managers
  • Profit centers rather than cost centers
  • Industry benchmarks and best practices used
  • Self adjusting targets to meet
  • Budgets oversimplified and very little detail
  • Budget for activities rather than costs
  • Medium term strategy continuously adjusted
  • Boundaries rather than targets
  • Encourages initiative
  • Enables line managers to make fast decisions
  • Bad news shared immediately
  • Flexibility and exit routes built into budget
  • Rewards based on relative performance to the competition or industry as a whole
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Copyright 2014 Francois Andlau  -  all rights reserved