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Total Business Budgeting.

CORPORATE BUDGETING--TOP-DOWN target setting, bottom-up budgeting activities, and then top-down budget reviews and modifications--involves effort from many different groups, which makes it easy to lose the big picture view of the complete budget process.

Total Business Budgeting by Pobert Rachlin is one way to not only hold onto this view but also widen it. The book examines the various components that help create a complete budget and discusses the reasons for budgeting, namely increasing shareholder value. Instead of presenting lengthy dissertations on budgeting as a financial concept, the book focuses on the development and discussion of a laundry list of what to budget for.

The book begins by discussing the role of budgeting in business. The information can be compared against your company's current budgeting practices and used to develop process improvements.

Rachlin emphasizes the big picture by covering budgeting from the identification of pertinent goals at the business unit level (sales, volumes, prices, etc.) to the establishment of performance targets.

All types of budgets are reviewed from sales budgets and production budgets to other liabilities budgets.

In a typical business setting, though, all the budgets discussed in the book would rarely be developed. Although the total business budgeting process would provide a better corporate budget, usually there isn't enough time or resources to develop a budget for every item impacting the balance sheet or income statement. Most businesses focus on a few key budgets, such as sales and cost of goods sold, thereby obtaining a gross margin budget. Operating and administrative expenses are also budgeted along with a few basic statistical items such as headcount and volume data (for example, sales quantity, production quantity, number of customers).

Forms are provided in the appendix and throughout the text in an effort to help you capture budget data. But using the forms in a corporate budget cycle would require the budget process to be mostly manual; today's software-driven environment can't incorporate the forms. Yet they can function as important checklists for any of you responsible for assembling and administering the budget. The forms force reflection about the budget process and the type of data to be captured and provide a mechanism for sharing ideas and obtaining budget approvals.

With its short chapters, Total Business Budgeting condenses a formal, in-depth budgeting textbook for the busy executive or the budget director looking to expand and improve the budgeting process. Those who know relatively little about budgeting and are in need of expanding their knowledge can also absorb the budget topics presented. The text fits well for those who are tasked with creating and managing a corporate budget process and who may need to validate their current budgeting processes or want to incorporate additional features into the process to increase its effectiveness.
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Title Annotation:Review
Publication:Strategic Finance
Article Type:Book Review
Date:Jan 1, 2000
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