Sales Budget and Audit

Prepared by:-Dinesh Khiyani Roll No:- 28 Submitted To: Rajendra.D Sir

Sales Budget
It is a process of allocating a portion of an organizations resources for its various sales related activities for a specified period of time. It helps management identify the financial difficulties they might face in the budgeted period and prompt them to prepare strategies to deal with them. It serves two purpose viz.,
Mechanism of control, Instrument of planning.

 Mechanism of control: Control deviation, Explanation about reasons of deviation is warranted, Leads to arguments, frustration, entire budget is questioned, Training of employees to best utilize budgeted resources.

Instruments of planning: Determining future course of action, Forecasting sales, scheduling production process and budgeting expenditure for organization.

Benefits of Budgeting
Improved planning, Better communication and coordination, Control and performance evaluation, Psychological benefits.

Principles of budgeting
All employees must be involved in process, Practical and gain acceptance in organization, Output must be linked with inputs, Flexible to adapt to environmental factors, Management should continuously learn.

Types of Budget
Sales budget.
Detailed plan showing expected sales for future. Developed based on expected revenue. Sales forecast shud be prepared based on each product division rather than for customers or region Forms the basis for other budgets like finance and production budget

Selling-Expense budget.
It gives expenses that would be incurred by sales dept to achieve planned sales. Includes commissions, salaries, traveling and entertainment. Cost incurred in training a new salesperson should also be included.

Contd
Administrative budget and Profit budget.
Comprises budget allocation for general admin expenses such as rent, electricity, office furniture, stationery, etc.. In profit budget, gross profits are calculated by deducting sales expenses from revenue generated by sales dept.

Methods of Budgeting
Involvement of sales manager is utmost important as he/she well be held responsible for expenses incurred by the dept. Affordability method. Percentage-of-Sales method. Competitive Parity method. Objective-and-Task method. Return oriented method.

Developing a Sales Budget

Review and analysis of situation, Identifying specific market opportunities and problem, Sales forecasting, Communicate sales goals and objectives, Preliminary allocation of resources, Preparing budget. Getting approval for budget.

Precautions in preparing Sales Budget

Inability to project courses of future events. Inability to gain acceptance. Involvement of time. Repudiation of long term

Sales Audit
A sales audit aka sales force management audit is a cross-functional exercise that evaluate the entire selling operation I a company. Evaluation helps improve performance of sales force and effectively allocate resources for achieving sales objective.

Elements of Sales Audit

Sales management environment:
Intra-organizational
Relationship between sales and other dept, Marketing mix, Organization of firms activities. Synergy between sales dept objective and overall objective of firm
Customers, Economic-demographic factors, Competitive, Technological, Legal and political, Influence of this factors on future sales

Extra organizational factors.

Contd
Sales management planning system
Objective of sales dept, Sales management program, Implementation.

Sales management organization evaluation

Adequacy of sales managers. Adequacy of management practices.

Sales management functions

In-depth verification of recruitment and selection, training, compensation and expenses, motivation, forecasting, quotas etc.

Marketing Audit
Procedure of Marketing Audit
Setting objective of audit Collecting data Report preparation and presentation

Components of Marketing Audit

Marketing environment audit Marketing strategy audit Marketing organization audit Marketing system audit Marketing productivity audit Marketing function audit

Thank you