What is a spending and revenue plan?

In addition to planning economic activities, the company needs financial planning (budget revenues and expenses of the enterprise). It is with his help that the company's management can provide control over the formation, as well as the rational use of resources. In addition, financial planning allows creating conditions for increasing the efficiency of using the existing potential of the enterprise and, in general, improving its financial condition.

The expenditure and income plan allows you to identify reserves that are not accounted for in the production plan , suggest methods that make it possible to make better use of the existing production capacity of the enterprise, and also take into account other important points.

To ensure flexibility and prompt decision-making, it is customary to compile a revenue and expenditure plan on a quarterly basis, while inflation must be taken into account. When developing a financial plan, the following indicators are determined:

- expenses for the sale of finished products;

- VOR;

- depreciation;

- investment size;

- sources of financing;

- the enterprise's need for current assets;

- sources of covering the need for working capital;

- and others.

The budget is compiled on the basis of the calculations of the indicators indicated above. Judging by the name, it reflects, on the one hand, projected revenues and incomes from the activities of the enterprise, and on the other - costs and all kinds of deductions. Ultimately, the financial plan is the information base of budget control. That is, for the timely implementation of the analysis and the identification of a variety of deviations of actual indicators from forecasted ones. If inconsistencies are detected, appropriate adjustments are made. The plan of expenses and incomes can be not only general. Often, local budgets are compiled in parallel, which take into account forecasts related to the functional or operational budget.

There are several strategies to plan a company's expenses and revenues:

- Top down. In this case, all tasks, goals and targets are set by senior management. After that, the indicators are broken down into smaller ones and included in the plan of this or that unit.

- Down up. The creation of a plan of expenditure and income starts here from the lowest levels in the hierarchical structure of the enterprise. Further, the indicators are transferred to the sales service and, after agreeing with the forecasted volumes of revenue, are transferred to the top management unit. The administration of the enterprise compares planned expenses and incomes, and then determines what result it is necessary to achieve in the considered period.

The overall budget reflects the relationship of the enterprise with other market participants (financial and credit institutions, insurers, state and municipal enterprises and others). In addition, the expenditure and income plan should take into account the size of inflation, changes in the monetary policy of the state and other factors of macroeconomics.