December 13, 2012

Budgeting Essentials
Developing a Winning Operating Plan for 2013 and Beyond

Dial-In Info:
1-800-941-1366

Thanks for joining us!

The webinar will begin shortly.

access.gecapital.com

December 13, 2012

Budgeting Essentials
Developing a Winning Operating Plan for 2013 and Beyond

Todays Presenter:

David Genet
Income Statement Manager
GE Home & Business Solutions

access.gecapital.com

Disclaimer
Disclaimer: This webcast is for information purposes only and is not intended as an offer,
solicitation, or recommendation for the purchase or sale of a financial instrument or to
effect a transaction. The information contained within this webcast has been obtained
from and is based upon sources believed to be reliable. General Electric Capital Corporation
and any of its affiliates (collectively GECC) do not guarantee the accuracy or completeness
of the information and make no express or implied representations, but reasonable steps
have been taken to determine the accuracy and completeness of the information. All
opinions, projections and estimates constitute the judgment of the authors as of the date of
the webcast and are subject to change without notice. Market rates, valuations and
availability of financial instruments also are subject to change without notice. Nothing
contained within the materials constitutes financial, legal, tax, accounting or other advice,
nor should any investment or any other decisions be made solely based on this webcast.
You should obtain advice from qualified experts before making any investment decision.
This webcast is produced separately from any other activity of GECC and was completed
without access to non-public information that may have been received by other units of
GECC. This webcast may not be reproduced or redistributed in any form without prior
written permission from GECC. The use of this webcast in connection with the writing,
marketing or promotion of any financial instruments, services or products is prohibited.

3
Access GE budgeting webinar
12/13/2012

Agenda

Budgeting at GE

Strategic Outlook budget process

Step 1: Functional bottoms up

Step 2: FP&A top down

Assumptions in budgeting

Step 3: Reconciliation and revision

Pitching your budget

Step 4: Finalization and game plan

Summary

4
Access GE budgeting webinar
12/13/2012

Budgeting at GE
Budgeting is

Budgeting is not

crucial to driving business strategy and

initiatives

a finance only process or an operations only

process

a basis for evaluating performance and

reaching goals

a rigid process with a right and wrong way

to perform each step

3 Year Outlook

1 Year Strategic Est .

OP Plan

Growth Playbook . April-May

Session II October-December

December-January

Strategic 3 year outlook

focusing on industry &
macro environment

Lay outline for next fiscal

year driven by business
imperatives and strategy

Drives more detail around

timing of SII and any
changes/challenges

Sets the basis for annual

planning sessions

Most important planning

period plan by qtr

OP Plan becomes final

budget

5
Access GE budgeting webinar
12/13/2012

Strategic Outlook budget process

1

Functional
bottoms up

Reconciliation &
revision

Finalize budget &

drive ownership

FP&A top down

1. Functions conduct individual bottoms up forecasts and estimates focusing on their own
specific metrics and areas of emphasis (cost, capacity, backlogs)
2. FP&A simultaneously executes on a top down forecast echoing leaderships
expectations and considering macro/industry trends
3. Function specific and FP&A budgets are reconciled together to make note variances,
metrics, and areas of consistency/inconsistency in emphasis
4. Finalize budget, clearly communicate the focus of the plan, and operationalize ways to
ensure accountability and ownership function by function
6
Access GE budgeting webinar
12/13/2012

Functional bottoms up
Process

Use management direction and historical

performance as baseline

HR
Supply
Chain

Tech

FP&A

Sales, supply chain, marketing, etc. teams

independently complete budget

Teams focus on their specific metrics and

major points of emphasis
Proposals/cutting of programs, headcount,
and resources

Submission of budget into ERP system

Product
Mgmt

Sales
Mktg

Critical to Quality
2-3 week timeline with hard stop (pencils down)
Little to no communication with FP&A team to
drive intuitive assumptions

7
Access GE budgeting webinar
12/13/2012

FP&A top down

Process

Financials and key points of interest based

on leadership directives, macro and
industry, company wide trends and goals
FP&A puts together tops down of how
entire business should look

HR
Supply
Chain

Tech

FP&A
Product
Mgmt

Sales
Mktg

Anticipate based on functional behavior the

budgets and proposals to come

Critical to Quality

Drive metric consistency material

inflation needs to be offset with price

2-3 week timeline with flexible models built

to track changes made in reconciliation step

Finalized budget should be theoretical

Profit & Loss no system interaction

Guidance and communication to functions

should be at a minimum

8
Access GE budgeting webinar
12/13/2012

Assumptions in budgeting
Controllable

Non-controllable

Headcount and people cost

Macro environment

A business controls its organization and

employees but must plan appropriately

How does the pending fiscal cliff impact

consumer spending? Globally, do we need to
redirect efforts in Europe or wait for a rebound?

2X11 C&B $

EOP

2X12 C&B $

$100,000

3.5%

$103,500

Price/volume/mix
The business strategy should make
assumptions around the impact of price
volume and mix of products

Industry
What is our competition planning for new
products in the next year? How will this impact
our price/volume/mix equation?

New product introductions and investment

NPIs and investment into product lines should
be based on market demand and trends, but
also supply chain costs and profitability
9
Access GE budgeting webinar
12/13/2012

Reconciliation and revision

Process

FP&A reconciles functional budget with the

top down expectation

HR
Supply
Chain

Tech

FP&A

Differences and variances in financials,

metrics, headcount, etc. eliminated
Function(s) adjustment to correct

Product
Mgmt

Sales
Mktg

FP&A adjust/hedge business in total

Ensure that financials and metrics tie out

with leadership directed strategy
End result of reconciliation and revision
should be pitch for leadership

Critical to Quality
~1 week time period for completion
Communication between FP&A and functions
regular and important

10
Access GE budgeting webinar
12/13/2012

Pitching your budget

Key Contents

Current year total and recap focus story

on financials and major wins & losses

Next year financial outlook for total

business steer from individual P&L detail

Touch on cash flow early to help set tone of

true business profitability

Competitive environment and industry

outlook to help justify strategy

Individual P&Ls highlighting new products

and investment into product line
Summary page to drive home outlook

Critical to Quality
Stay high level and drive focus of the pitch
towards one or two key points
FP&A should control the deck with inputs
from functions as needed
Hard pencils down 2 days prior to pitch to
leadership
11
Access GE budgeting webinar
12/13/2012

Finalization and game plan

Process

Budget is revised and finalized upon review

with leadership

HR
Supply
Chain

Tech

FP&A

Communication of budget is communicated

via CFO staff and in ERP tool as final version
financials and strategy

Product
Mgmt

Sales
Mktg

Control mechanisms put in place to ensure

accountability and ownership

Critical to Quality

Weekly risks and opportunities pulsed

Weekly roll-up of business projections

Monthly/quarterly close schedules

defined

Track functions on where they project vs

where they end up to learn behavior

Accountability two-way street FP&A driven,

but functional teams must own their number

12
Access GE budgeting webinar
12/13/2012

Summary of budget process

1

Functional
bottoms up

Reconciliation &
revision

Finalize budget &

drive ownership

FP&A top down

1. Functions conduct individual bottoms up forecasts and estimates focusing on their own
specific metrics and areas of emphasis (cost, capacity, backlogs)
2. FP&A simultaneously executes on a top down forecast echoing leaderships
expectations and considering macro/industry trends
3. Function specific and FP&A budgets are reconciled together to make note variances,
metrics, and areas of consistency/inconsistency in emphasis
4. Finalize budget, clearly communicate the focus of the plan, and operationalize ways to
ensure accountability and ownership function by function
13
Access GE budgeting webinar
12/13/2012

Questions?

David Genet
Income Statement Manager
GE Home & Business Solutions

access.gecapital.com