According to Standard Bank.co.za, budgets are the maps from the accounting system to the different sections of a business. They provide forecasts, guidelines and targets for business managers.
The site adds that a sales budget takes into account the amount of and monthly fluctuation in sales.
To ensure your sales budget is effective from the start, make sure you watch out for these red flags when preparing it.
Three red flags to look out for when you prepare your sales budget
#1: Compare your actual sales amounts to your budgeted sales amounts and determine why there's a difference, says the Practical Accountancy Loose Leaf.
If you can't get to an answer, investigate why there're differences and adjust or change your approach either by trying to improve your sales figures or by adjusting your sales budget.
#2: Always make sure your sales price per unit or charge out rate per hour are accurate and correct compared to your selling price. If you give discounts, make sure you put this in your sale and adverting expenses budget.
#3: Don't include Vat in your sales budget.
Remember to include sales price excluding Vat. Vat received on invoices isn't your money and you have to pay this over to SARS. Take Vat into account in your cash flow budget.
The Accounting & Tax Club adds that 'if you're launching a new product, updating your existing budget, or starting a new business, the sales budget will help you benchmark your goals – so you can go from where you are to where you want to be.'
So make sure you lookout for these red flags to ensure your sales budget is effective.
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