Companies today rely on sales budget in order to accurately predict sales forecast and profitability. Sales budget is considered to be the backbone of corporate decision-making. It is through a reliable financial plan that managers can make informed decisions on pricing changes, inventory planning, and realistic goal setting.
Sales budget means itemization of the company´s sales expectation for a certain period – which is not only limited in units but also in dollars. Anyone who works with sales budgeting knows this is not an easy task especially if a company, for example, has a huge number of products. We have listed down some best practices in Sales budgeting below.
- Smaller number is key
When making a sales budget, it is common practice to break sales budget down to smaller number either by product category or geographic location especially if you have a huge number of products otherwise it becomes too difficult to generate estimates.
- Make your Sales budget timely
Present your sales budget monthly or quarterly so you have consistent and timely actionable information. When a sales budget is presented in an annual format, it is too aggregated and it ends up providing no useful information for the company.
- Make it a collaborative effort
The information used for sales budgeting comes from different sources. To make the sales budget more accurate and telling, it has to come from people who work with them daily. For example, Sales and Marketing managers can inform people of the campaigns they are going to run that may alter timing and amount of sales. The R&D manager can also contribute by informing every one of potential release dates of new products.
- Do Post-acquisition budgeting
When talking about acquisitions, it is best not to include any budget estimates related to possible acquisitions of other companies. Acquisition is a very complex and tedious process that it is difficult to predict its timing and amount of sales. It is best practice instead to just revise an existing budget plan after the acquisition is final and binding.
- Adjust and readjust
One of the major challenges of sales budgeting is ensuring accuracy. In an attempt to solve this, it is best to adjust the sales budget periodically or quarterly with revised estimates. That being said, there will be a need to adjust the rest of the budget derived from sales budget which on the downside requires spending a good amount of staff time.
We can´t stress enough the importance of Sales budget and of doing a good job in forecasting it. The sales budget, for many companies, is what all other budgets depend on such as production budget or HR budget. The stakes are too high to gamble on inaccurate forecasting of budget.
If you are still manually doing your sales budget today and are met with a long line of issues, Performance Canvas by DSPanel has developed a tool for Sales budgeting that can guarantee automated adjustments, accuracy, and transparency for your company.
To learn more about how Performance Canvas handles Sales budget, book a FREE ONLINE DEMO with us or email us at email@example.com.
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