Subject: SITXFIN004 – Prepare and monitor budgets Project 1 Word count: 1250 words · Write a paper explaining why hospitality enterprises need to draw up budgets. In your paper address each of the...

1 answer below »
No reference required. There is an example solution for guidance, please don't write the same to it but can use its structure.


Subject: SITXFIN004 – Prepare and monitor budgets Project 1 Word count: 1250 words · Write a paper explaining why hospitality enterprises need to draw up budgets. In your paper address each of the following questions: 1. What types of budgets might be utilised and why are they necessary? 2. What information would be used to inform the budgets—both internal and external? 3. How might the different sections or personnel in an enterprise contribute to the budget? 4. How would you select the appropriate budgeting processes? 5. With whom might a draft budget be discussed and why? 6. Once the budget is finalised, to whom should it be communicated and why? 7. How, when and why should the budget be reviewed? 8. If the review shows that the budget is not achieving its intended objectives, what action might be taken? Hospitality businesses need to draw and manage their budgets for effective operation and management of the enterprises. Budgeting is critical for strategic planning, budget control and measuring operating results of the business. Types of budgets There are several types of budgets that the hospitality businesses can utilize: 1. Cash flow budget- It predicts how cash will flow in and out of a business within one financial year. This budget is critical for organizations to effectively manage and control its accounts receivables and accounts payable and determine if they have sufficient cash to continue with the business operations. 2. Operating budget- These are budgets that enable the hospitality enterprise to project its revenue and expenses over a given period, which may be weekly, monthly, quarterly, semi-annually or annually. It includes production, labor, materials, logistics, operations, etc 3. Financial budget- Hospitality enterprises need to develop a financial budget to manage its assets, income, expenses and related financial aspects. A financial budget shows the overall financial health of the enterprise, its spending, revenue from operations. A positive financial budget shows that the firm is stable and the business is good. 4. Sales Budget- This budgets stipulates the expected sales quantities, sales revenue and expenses within one financial year. 5. Production budget- This budget takes care of the stock and product that needs to be produced in the enterprise. It caters for sourcing of materials and manufacturing the product, and ensuring that there are sufficient stock level. Effective management of production budget keeps the production cost low and determines the product price in the market. 6. Personnel budget- This budget takes care of the salaries and payments for employees and manpower in the hospitality enterprises. It is used to pay salaries for permanent and temporary staff, consultants and contractors within the business. 7. Marketing budget- This is assigned to the marketing department for marketing campaigns and promotional activities of the hospitality business. The budget takes care of marketing and branding activities, events, campaigns, and advertising aimed at supporting the sales department to achieve their set targets. Information for budgeting The hospitality enterprise needs accurate information to guide the budget preparation process. The information can be sourced internally and externally. Internal data sources of information include performance data from the previous operating periods, internal management policies and procedures, financial proposals derived from key internal stakeholders, estimates and predictions from sales department, internal enterprise guidelines on budget preparation, and management commitments in different operation areas. External data sources and information may be collected from competitor research, customer and supplier research, financial information collected from suppliers, guidelines and limitations from grant financing, industry and economic performance. Personnel contribution to the budget While involving all the employees in the budgeting process is time consuming, it has the potential of encouraging employee participation, motivation and ownership of the budget. The bottom-up approach is important since employees provide credible and reliable information in their functional areas, which is critical to the budgeting process. A budget committee comprising of employees from all the functional areas should bear the responsibility of compiling, developing and approving the master budget. It is important to provide all the colleagues and employees with adequate notice for participation and contributing to the process of budget planning. Selecting appropriate budgeting process The appropriate budgeting processes varies from one enterprise to another. However, there is a standard process that firms follow while establishing the budgeting cycle. This include: 1. Prepare budget information including determining nature and scope of budget planning activities with colleagues, identifying, accessing and interpreting information and data, and analyzing internal and external factors impacting the budget. 2. Preparing the budget which include drafting the budget based on the collected information, estimating income and expenditure, assessing and presenting options, presenting recommendations, integrating enterprise objectives and circulating draft budget for input. 3. Finalizing the budget which include negotiation in accordance to the firm policy and procedures, incorporating feedback and modifications, completing the final budget and informing employees and colleagues on the final budget. 4. Monitoring, evaluation and review of the final budget which include regular reviews, control and corrective actions in case of deviations, analyzing internal and external changes and incorporating them in the budget. Discuss draft budget The draft budget should be circulated to appropriate colleagues, functional heads and departmental managers for review and comments. this is important because the departmental managers offer insights, comments and suggestions for modification and make a decision on whether the budget is feasible over the budgeting period. It is important to agree with the departmental teams and incorporate modifications, before approving the draft budget. Communicating final budget The finalized budget from the departments and functional areas should be sent to the finance director. The upper level finance director reviews and considers the draft budget for approval. Once this has been approved by the finance director, general manager and the top executive team, it is compiled into a master budget. The budget committee oversees the compilation and approval of the final master budget. Colleagues and departmental managers are then informed of the final approved budget and their responsibilities for reporting, financial control and management. Budget review It is important to conduct regular review of the budget by comparing and evaluating actual performance against the planned and estimated performance and develop relevant and accurate financial reports.It is important to investigate and analyze both internal and external factors in the business environment during the budget review and incorporate the necessary adjustments in the budget. All financial commitments should be incorporated promptly in the budget and the resulting financial reports. It is important to collect and document all the relevant information that could be utilized in informing future budgets. Budget not meeting set objectives In the event the review reveals that the budget is not meeting its intended objectives, it is important to take appropriate corrective action to address the deviations. This might include implementing additional control measures, adjusting the operations plans, and cutting the surpluses to avoid unnecessary expenditures.
Answered Same DayNov 30, 2021SITXFIN004Training.Gov.Au

Answer To: Subject: SITXFIN004 – Prepare and monitor budgets Project 1 Word count: 1250 words · Write a paper...

Sanjukta answered on Dec 05 2021
143 Votes
5
Hospitality Management
SITXFIN004 – Prepare and monitor budgets
1.
It can be said that the budgeting along with forecasting is used by the hoteliers for the financial control and the strategic planning, and also as a standard against which for compu
ting the actual operating expenses. Realizing how much cash is coming all through your business is urgent and that is the reason planning is a key ability that all friendliness experts ought to comprehend (Uyar and Bilgin, 2011). Tragically this is an obligation that is typically simply given to Supervisors or Managers, albeit in actuality all of your colleagues ought to comprehend the significance of their part in producing deals and how their conduct and administration conveyance will affect this. Monetary figures and financial plans can fortify administration's control of hotel’s operating costs and help decide the benefit of the property following are some of the budgets that can be used by the hospitality enterprises:
· Operating budget- This type of budget must include some of the factors such as the labour cost, production, etc. A regular quarter or month on month of these particular reports will be helping in terms of determining the overspending of budget.
· Sales budget- It is the type of budget that tend to give the expected sales expenses and revenue as well as selling for the company for particular period of time.
· Operating budget- It is mainly the forecast in terms of the projected expenses and also income with its analysis over the course of a particular period of time that is known as the operating budget.
· Financial budget- This is regarded as one of the strongest determinant in terms of the stability of a firm as well as a positive financial budget simply indicates healthy as well as good company.
2.
The financial data is mainly used for informing strategic, organisational, as well as the operational plans. It is needless to say that hospitality business needs proper information for guiding the preparation of the budget procedure. The information is quite likely to be sourced externally as well as internally. Furthermore, internal data sources in terms of information consist of performance data from the internal management policies, previous operating periods as well as process. External information and also sources of data will be collected from consumer, competitor research and supplier research, financial information collected from guidelines, suppliers along with limitations from industry.
3.
It can be said that the various personnel or...
SOLUTION.PDF

Answer To This Question Is Available To Download

Submit New Assignment

Copy and Paste Your Assignment Here