Original: Li Sheng
The end of year is approaching and many of hotel's friends are about to start or are budgeting for next year
For beginners: if there is no link to data from previous years, summaries of data for this year and I have little experience ... this will inevitably lead to confusion
Encountering this hell of a job in production
What should a beginner do when making an annual budget? Now I will teach you how to scientifically make an annual forecast
PART 1Introduction to Hotel Financial Budgeting
The financial budget of a hotel is a quantitative reflection of official plan for all economic activities of hotel in a certain period using monetary measures
It is also a quantitative reflection of project plan as stated in hotel's financial statements for a certain period in future
It has characteristics of predictability, applicability, and variability
A hotel's financial budget can clarify hotel's business goals
Coordination of work of various departments can be used as a basis for controlling financial activities of hotel and as a standard for evaluating effectiveness of work
Generally speaking, hotel financial budgeting methods include fixed budget, flexible budget, incremental budget, and zero base budget
Recurring and rolling budgets. The hotel's financial budget should clearly define budgeting policy, capture and collect relevant information and data, and pay attention to budget continuity and length relationship
PART 2 Harvesting budget
1. Operating income budget
The hotel department's operating income is usually combined with number of rooms rented out, estimated occupancy, and estimated nominal price.
Comprehensive consideration of factors such as expected discount rate and number of working days in budget period
Budgeted housekeeping operating income for a particular room type = number of rooms available for rent in that room type x estimated occupancy x estimated nominal price x estimated discount rate x estimated number of working days
Calculate estimated amount separately and then add it up to get operating expenses and room department expense budget
The room department's fixed cost refers to costs that do not change with room rent, such as payroll and social security costs, depreciation costs, capital repairs costs, clothing costs, and insurance costs, and etc.
Variable costs refer to costs that change with amount of space rented, such as fuel costs, laundry costs, water and electricity costs, consumption of materials and consumables, repair costs, and other costsstrong>
Housekeeping Department Budget Change Costs = Daily Room Change Costs Consumption × Number of Rooms × Occupancy Rate × Number of Days For those expenses that cannot be clearly attributed to specific departments, such as fuel, water, and electricity costs , etc.
It is necessary to choose a certain standard for distribution to each department, for example, we can distribute according to share of each department's operating income in total hotel income
Expenses to be allocated by this department in current period = total expenses for this item × (revenue of this business unit ÷ total hotel income)
Finance Department Financial Budget
1. Preparing an operating income budget for catering department
When budgeting operating income of a food service department, it should be considered in conjunction with number of visitors, per capita consumption, and various promotion methods
Because number of diners and consumption are different in each time period, they should be collected at meals and then summed up
Estimated operating income per dish = restaurant seats × seat turnover rate × consumption per capita × working days in budget periodBanquet hall revenue = number of banquet halls × number of days in budget period × occupancy rate of banquet halls Average number of visitors × food standard per capita
Zero income = zero canteen seats × number of days in budget period × average number of diners × consumption per capita
2. Preparing an estimate of operating costs and expenses of catering department
The budget for operating expenses and expenses of catering department includes budget for operating expenses and budget for operating expenses
Operating costs are also called direct costs, which depend on number of receptions and level of consumption of guests
Costs can only be budgeted through gross profit
Direct Food Service Budget Costs = Budgeted Catering Operating Income × (1 - Gross Profit from Budgeted Catering)
Gross margins for beverages sold at different restaurants and locations vary, so should be calculated separately and then summed up
②Food Department Operational Budget
The operating budget of catering department is divided into fixed and variable expenses, and fixed expenses budget is same as that of hospitality department.
Variable costs such as (fuel costs, low cost consumables, water and electricity costs, material costs, etc.)
A flexible budget should be prepared along with food expenses
Management budget preparation
Zero-based budgeting can be used for management budgeting: i.e. all budget expenditures are zero-based
Regardless of the items of expenditure and amounts incurred in previous reporting periods, proceed from reality
This is a method of preparing cost estimates based on total balance sheet by considering reasonableness of content and cost standards for each item of expenditure in budget period
Create financial budgets for various projects, combined with savings potential and factors during budget period
Cash budget preparation
There are two methods for preparing a cash budget: cash income and expense method and net income adjustment method.
The method you choose depends largely on length of cash budgeting period
1. Method of cash income and expenses
Also known as direct method, it directly forecasts hotel's various revenues and expenses over budget period, line by line
A way to balance your finances. As a general rule, prepare preliminary budgets on a quarterly, monthly, or even weekly or daily basis.
2. Net income adjustment method
The net income adjustment method is mainly applicable to preparation of cash budget over a long period of time, reflecting estimated and estimated amount of cash of management department over a long period of time
First of all, this is due to external and internal sources of funding. The net income adjustment method is an indirect method of preparing cash budget.
The cash budget prepared by this method mainly consists of two parts: source of cash and use of cash. The source of funds section includes internal sources, underlying net income from operations plus income tax expense
Cash reflected in depreciation and similar expenses, certain other sources of financing, including bank loans
Sale of fixed assets and similar sources. The use of cash refers to increase in receivables, purchase of fixed assets, purchase of raw materials and other inventories, etc.
The net income adjustment method focuses directly on changes in receivables, inventories and current capital liabilities. This is very necessary for many restaurants, especially those with a large share of receivables and a large amount of funds occupied by inventory.
Managers need to account for accounts receivable and amount of cash associated with inventory, as well as cash "backed" by current liabilities, in their day-to-day operations
Thus encouraging management to monitor liquidity accounts more closely and accelerate capital turnover. When budgeting purchase, material consumption proposed in production budget should be combined with beginning of material
Inventory at end of period is used to determine purchase quantity, and then necessary funds for purchase are calculated according to estimated price per unit of material
At same time, after taking into account repayment of debt on materials in previous period and payment for purchase of materials in current period, cash costs for purchase of materials during budget period are estimated
Estimated cash cost = prior period accounts payableEstimated cash cost = repayment of prior period accounts payable + current payment for materials purchased in current periodEstimated purchasing and production costs = expected stocks at moment end of period - beginning of budget period stock
When indirect method is used to prepare cash flow budget, it is prepared on basis of net income in budget income statement
The profit and loss budget is a prerequisite and basis for preparation of settlement statement of cash flows using net profit adjustment method
Preparation of hotel balance sheet
The balance sheet budget is also referred to as projected balance sheet, which is a budget statement prepared in accordance with content and format of balance sheet to comprehensively reflect financial position of budgeting unit at end of period
As a rule, based on analysis and preparation of actual balance at beginning of budget period and sales or operating budget, production budget, purchasing budget, capital budget, financing budget, etc.
EstimatedThe balance sheet is a comprehensive budget that reflects financial position of hotel's budget at end of period. With exception of end of previous year, remaining items in table should be reviewed and completed based on above budgets
It summarizes relative lack of funds at end of planning period. The basis for preparation is balance sheet at end of reporting period and relevant data of various business budgets, cash budgets and capital budgets during budget period
Estimated cash balance at beginning of period = estimated cash flow statement at beginning of periodEstimated cash flow of balance sheet at end of period = estimated statement of cash flows at end of period
Estimated retained earnings at end of balance sheet = Estimated retained earnings at beginning of balance sheet + Estimated profit and loss for current period
A hotel's financial budget is not fixed once it is made. The preparation of financial budget is based on a number of assumptions and estimates
Therefore, budget is somewhat limited. If there are large discrepancies in budget execution process
It is necessary to make appropriate changes to financial budget in order to increase role of financial budget in business management
How can we do a good job in financial budget of hotel more easily, in addition to gaining experience