tlip5035a presentation 3
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PRESENTATION 3 OUTLINE
The following areas are covered in this presentation:
• The Communications Package
• Reviewing and Amending the Communications Package
• Training Activities
• Definitions of Terms and Data
THE COMMUNICATIONS PACKAGE
• Before you can distribute your forthcoming budget to all
concerned, it will need to be reviewed and checked
• The method of communicating the budget will also need to be well
thought out especially for the larger corporations that may have
interstate offices and branches
• A large organisation at a single location will nearly always have
separate divisions and departments all with different parts of the
budget they are concerned with
• The skills that input daily decisions are solely dependent on whom
you engage in the decision process
THE COMMUNICATIONS PACKAGE
Finance Specialists
• You may be comfortable making financial decisions when the
company is small, say 1-5 people, but as the business grows so
does the need to seek specialist input
• In a mature corporate trading entity you may find that the
business is broken into several divisions with skilled and
responsible managers leading these internal teams
• The reliance upon external advisors is unavoidable and essentially
a key to operating successfully. Externals advisors can include
Lawyers, Accountants, Financial planners and industry consultants
THE COMMUNICATIONS PACKAGE
Finance Specialists
• Internal to the operation you may have a complete accounts
department made up of several staff and specialists including:
Data entry and customer service officers Debtor and creditor managers
Reconciliation staff Book keepers and Accountants
Procurement or contract managers Budget and risk analysts
Audit and compliance officers Chief Financial Officer (CFO)
THE COMMUNICATIONS PACKAGE
Finance Specialists
• A review by a financial specialist or members of the accounts team
will ensure the following considerations have been addressed:
− The budget and forecast makes sense
− The revenues match expenses in terms of timing
− The budget or plans are systematic and address all types of
expense or revenue expected
− The budget or plan documents all the assumptions and special
entries thoroughly
− Implementation of procedures to regularly compare the budget
or forecast to actual data and track the cause of variances is
undertaken
THE COMMUNICATIONS PACKAGEBudget Communications
• Stakeholder engagement ‘is the process used by an organisation to
engage relevant stakeholders for a clear purpose to achieve accepted
outcomes’
• It can provide useful information to shape the implementation of the
budget or financial plans at policy, operations, program or project level
• The key elements of effective engagement include:
− involving the right stakeholders
− ensuring a fit-for-purpose approach, with well-managed
interactions
− managing expectations
− using the information obtained from stakeholders
THE COMMUNICATIONS PACKAGEBudget Communications
• The terms communication and engagement are not interchangeable,
though they are inherently linked.
• There are different skills, tools and techniques for communication and
engagement, and engaging with stakeholders will usually require a mix
of both.
• In order to gain acceptance and adherence to the budget, an effective
communications process must be used
Communication usually involves a one-way flow of information (whether by speaking, writing or other means)
Engagement is about working with and involving stakeholders for a clear purpose—usually a two-way flow of information.
THE COMMUNICATIONS PACKAGEBudget Communications
• An effective communications process:
WHAT - Agreement on budget content WHO - Clear identification of responsibilities, accountabilities and delegations
Address stakeholders in the business and their information needs. Communication packages combine defined reports and the opportunity to query and clarify
A review process to address:How will you communicate and ensure consistency with organisational requirements
Make sure formats convey the correct messageBudget meetings must suit the audience and content
Opportunities to review and amend the communication
Effective communication activities to suit the target audience and content consult with team to ascertain best methods of communication
THE COMMUNICATIONS PACKAGE
• The communications package is designed to provide individual
team members with information through a medium of which is
useful for them in making informed decisions, and measuring their
progress against plans and budgets.
• When developing your package, you will need to address:
The overall budget and financial plan strategy needs to be broadcast to everyone
A top down budget will have specified the company-wide objectives of the budget
The communications package must deliver the budget and plan to all levels of the company
THE COMMUNICATIONS PACKAGE
• When developing your communications package, you will need to
address:
The responsibility for communicating the budget company-wide is a specialised task and should be assigned to either a permanent budget committee or a
senior manager. The financial aspects of the package are checked for accuracy and relevance by a specialist such as the finance director or accountant
The financial plan and associated detailed budgets need to be disseminated across as well as up and down the company personnel
The budget and plans need to be clearly documented
THE COMMUNICATIONS PACKAGE
• When developing your communications package, you will need to
address:
The budget and plan will need to clearly show the targets to be met and those responsible for the various implementations. For example the sales staff will be
responsible for the sales and revenue budget
It is most important for staff to be able to take ownership of the parts of the budget and plan that applies to them
Full budget details do not need to be conveyed to each person in the company, only those parts of the budget that affects them
THE COMMUNICATIONS PACKAGE
• The communication plan will specify how the budget and plan
details are to be disseminated. Your options include the following:
Newsletter Email Memos
Bulletins Meetings and Staff Discussions
THE COMMUNICATIONS PACKAGE
• The communication medium chosen should be catered towards
the preferences of staff members in receiving company directives.
• Some people will be happy to receive the information via an email,
some will prefer a one to one with their manager and some will
prefer a staff discussion.
• It may be the practice of a particular department to have regular
meetings to inform of or discuss new business
REVIEWING AND AMENDING THE COMMUNICATIONS PACKAGE
• It is important to review the communications ackage. This should
be done before the communications package is delivered to staff.
• The points that might be looked at during a final review include
the following:
Identify potential problems or foreseeable situations that may occur
Quantify and prioritise potential risks, problems or situations in terms of likelihood and impact
Identify actions that can be taken to avoid, manage or minimise impact of risks, problems or situations
REVIEWING AND AMENDING THE COMMUNICATIONS PACKAGE
• After a review by either the financial specialists or the
communication specialists or the budget committee, or any other
specialist group, there may well be some recommendations for
changes in the package.
• Some potential corrections may be required due to the following:
− Unexpected increases in costs
− Changes in sales levels and income
− Market fluctuations affecting supply and demand for labour
− Unexpected delays to projects
− Changes in legislation and financial obligations
REVIEWING AND AMENDING THE COMMUNICATIONS PACKAGE• Amending the communications package is not unusual. Quantifying
and prioritising budget risks, problems or unforeseeable situations
require a risk management process
• They should be managed in accordance with the organisation’s risk
management policies and procedures and any actions available for
unforseen budget situations will vary, but may include provisions for:
− Reducing or restructuring production to maintain stocks at a
manageable level
− Reducing costs by recycling, sourcing cheaper or alternative
materials or waste management
− Looking for alternate markets and opportunities
− Increasing marketing and promotions
− Maintaining a buffer for increases in costs
REVIEWING AND AMENDING THE COMMUNICATIONS PACKAGE
− Maintaining a buffer for increases in costs
− The ability to outsource certain tasks with more economical outcomes
− Diversifying outcomes
− Working on cheaper or lower quality raw materials where possible
− Increasing sales or production
− Reducing, recycling or reusing. Can another manufacturer use your
waste? It may reduce your expense to dispose of the waste
− Rental, leasing or hiring rather that purchasing outright
− Restructuring tasks to minimise costs associated with labour
− Succession planning
− Are there other ways to finance the cost? Maintain a contingency fund
for extra costs in times of unforeseeable situations
TRAINING ACTIVITIES
• Meetings and electronic communication will be the two most
common methods of disseminating the budgets and plans across
the organisation. This can be considered as budget training.
• There is no preferred method of communication; it will be
entirely up to each organisation
• The various forms of communication include:
Formal meetings Informal meetings One to one and small group meetings
Videoconferencing Email Other
TRAINING ACTIVITIES
Formal Meetings
Has an agenda, a chairperson or team leader and the target audience will have been identified in the communication
package.
Most targeted for a specific group in that the management level or individual competencies of the audience will be similar e.g. it may be a meeting of state managers and be chaired by
a chief operating officer
The participants will be expected to provide professional feedback with a desire to improve the process and delivery of
the communication package
TRAINING ACTIVITIES
Informal Meetings
Not as structured as formal meetings and are sometimes easier to arrange, usually much shorter in duration and designed to
give everyone a voice.
May be run in conjunction with a formal meeting, for example smaller groups may break up and discuss something specific in
an informal style.
Participants should be from a range of levels so that there is some knowledge base available to answer questions or explain
something to the others or provide clarification.
TRAINING ACTIVITIES
Small Group Discussions
Ideal for getting the message across, especially to a specialised group who all need to receive identical information.
E.g. all the regional purchasing managers will need to be informed of a budget initiative that has reduced expenses in
waste disposal due to a new supplier and contract.
Individual attention can be achieved in a small group discussion or one to one meeting and may be the optimum
means of budget training for the smaller organisation.
TRAINING ACTIVITIES
Videoconferencing
Handy communication method for a geographically diverse situation such as a national organisation with many branches e.g. national
supermarket chains.
Advantage: larger groups can be addressed and the proceedings can be recorded for future use and training proposes.
Disadvantage: meeting cannot be easily halted to respond to non-agenda items and feedback is not immediate as the participants are
not in the same room.
Videoconferencing can be used for both formal and non-formal meetings.
TRAINING ACTIVITIES
Electronic Communication
Easy, widespread and well-understood method of communication and has the advantage of being able to be targeted to individuals
and groups at any time
Can also be monitored, changed rapidly, is geographically independent and can be referred to at the recipient’s convenience
The monotony of the message however does little to allow for individuals learning speed or comprehension levels and email
communications should be monitored for completeness of understanding and backed up with informal meetings.
Responding to emails should be encouraged if further information is required
TRAINING ACTIVITIES
Other
Bulletin boards, internal newsletters, printed matter and letters
These methods have a place but usually in conjunction with one of the previous modes.
Best described as ancillary to the meeting and electronic scenarios, but they have their place. If your organisation uses newsletters and
internal bulletin boards extensively then this method will be well tolerated, accepted and expected to be the preferred method of
communication
DEFINITIONS OF TERMS AND DATA
• Communication and financial specialists much ensure there is zero
ambiguity in the terms and concepts used in the budget
• If definitions are required they should form part of the
communication package
• Whatever format is adopted for use in the budget must be
consistent and unambiguous
• The use of the terms cost of goods, overheads and fixed costs can
cause confusion sometimes, so a brief explanation is advised.
When preparing a budget, expenses and costs need to be known
and in some cases predicted or allowed for
DEFINITIONS OF TERMS AND DATA• Some expenses will be easy to predict, as they are known. These are
called fixed costs (or fixed expenses/overheads). Examples are your
rent, lease payments, loan repayments, wages and salaries. You will
incur these no matter what.
• The other type of expense is called variable expenses and these have
to be allowed for when you are making up a budget.
• One of the biggest contributors to variable expenses for a
manufacturing business is the raw material expense, sometimes called
cost of goods sold. These are the costs directly related to production.
• For a service type business, variable expenses will include advertising,
office and computer expenses, vehicle expenses, some insurances,
safety equipment, waste disposal etc. These expenses will also occur
within a manufacturing business, a trading company and in a sole
trader type business.
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