BUDGETING AND FINANCE POLICY

BUDGET PREPARATIONS

The business plan will set the key parameters for all financial budgeting.
Variations to the business plan must be approved by the CEO and senior management strategic committee.
Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and CFO.
A CAPEX budget will be developed from the approved business plan.
A detailed sales budget must be completed before completing the profit budget for the year.
A cash flow budget covering the first three months will be prepared after the profit budget is completed.
A master budget including profit projections will be completed from which cost centre allocations will be made.
Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available as a separate document. Where possible, the notes should justify the basis on which the estimates were made.
Variances of more than 7% in budget reporting are considered unacceptable (if negative impact on business) or an anomaly (if a positive impact on business) and must be reported to the monthly budget committee meeting
Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
The financial cycle for budgeting purposes will be yearly ending 30 June.
Debtors should be given only 30 days maximum to pay accounts.
No more than 10% of Aged Debtors accounts should exceed 30 days. Where this occurs management must be notified and a finance committee meeting convened