Company's Financial Accounting
Sales budget: Definition and Template
Definition: Sales budget reveals the expected overall sales volume and general profit from sales for a particular period of time.
The first stage of budgeting includes the drawing up of a sales plan in monetary and quantitative terms, which is represented in the sales budget. The significance of this budget can hardly be overestimated, in any enterprise the budgeting process definitely begins with sales forecasting. And the effectiveness of the entire budgeting process and ultimately the success of the company will depend on how well the sales budget is drawn up. A sales budget (in Finnish, myyntibudjetti) is a starting point and the most important step in creating a master budget. As a rule, at the stage of preparing sales budget, many companies have difficulties, and their occurrence is due to the fact that the sales volume of the product is affected not only and not so much by production factors, but by the possibility of selling the product at the real market, which by-turn is subject to the influence of a large number of uncontrollable factors. So, when preparing a sales budget, it is extremely important to consider:
- sales volume of previous periods;
- production capacity;
- pricing policy;
- demand for products and its seasonal fluctuations;
- buying power of the consumers and changes in buying trends and preferences;
- taxation policies;
- sales geography;
- the activities of major industry players, competing companies;
- general state of the national and world economy,
- etc.
The main task in creating this type of budget is to calculate the volume of sales, prices and the expected income from sales as for the whole enterprise and for certain types of products. It can be fulfilled for each product, by markets, regions etc. The budgeting period is typically the year, that is broken down by months and the budget can be presented in either a monthly or quarterly format.
Data for calculating sales budget:
- sales volume in quantitative terms for each type of product or service,
- unit cost of production,
- selling price per unit of product or service,
- sales volume in monetary terms.
Important Points: When calculating the prices, inflation has to be taken into account; the sales volume is based on sales forecast. The information about any expected sales discounts or sales returns have to be also listed in the sales budget. On the basis of available data, the gross profit can be estimated, which will give an idea of the sales effectiveness and the overall efficiency of the enterprise. As a result of the calculations, the company's management get a notion about the expected cash flow from sales, which in turn form the revenue part of the cash flow budget.
When preparing a sales budget, it is important to consider it together with the budget for commercial expenses, since they are closely related. Any changes in one of the budgets will certainly lead to the adjustment of another. So, if the company's sales volumes become greater, this will lead to an increase in a number of expenses, and vice versa, with an increase in business expenses, it is necessary to adjust the sales budget.
As a rule, sales and marketing departments are responsible for preparing and execution of sales budget. A lot of research work have to be made to prepare effective sales plan and every effort must be taken to achieve the planned figures.
Sales budget, free download template in Excel format
English, Russian and Finnish versions
| Name | File to download |
|---|---|
| Sales budget | DOWNLOAD FREE |
| Бюджет продаж | СКАЧАТЬ БЕСПЛАТНО |
| Myyntibudjetti | LATAA ILMAISEKSI |