Budgeting

7. Actual Income

Each month, compare your actual income with your sales budget.

7.1 Analyse the reasons for any shortfalls in turnover.

• Was the shortfall caused by lower sales volumes than expected, lower prices, or a different sales mix?
• Is the market less buoyant than expected or is your market share below target?
• Was a particular product responsible?
• Is a particular location underperforming?

7.2 If turnover was higher than budgeted, analyse the reasons.

• Were your budget targets too low?
• Was the increase in sales a one-off or the start of a trend?
• Have sales been brought forward from future months? Will sales in those months now be lower than originally forecast?

7.3 Compare the timing of income with your projections.

• Did sales campaigns take longer to have an effect than anticipated?
• Were customers slower to pay than you expected?

7.4 Analysing the differences will help you to improve your ability to set future budgets and allow action to be taken where needed.

• Do you need to change the assumptions on which you base your budgets?