{"id":6055,"date":"2022-03-05T08:37:56","date_gmt":"2022-03-05T08:37:56","guid":{"rendered":"https:\/\/ihmnotessite.com\/?page_id=6055"},"modified":"2022-03-05T08:44:50","modified_gmt":"2022-03-05T08:44:50","slug":"budgeting-and-its-types","status":"publish","type":"page","link":"https:\/\/ihmnotessite.com\/index.php\/home\/hmct-notes\/bhmct-4th-year\/budgeting-and-its-types\/","title":{"rendered":"BUDGETING AND ITS TYPES"},"content":{"rendered":"\t\t
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BUDGETING<\/strong><\/span><\/h2>

Budgeting is\u00a0the process of creating a plan to spend your money<\/strong>. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with your income.<\/span><\/p>

MAKING A FRONT OFFICE BUDGET<\/span><\/h5>

  1. The most important long term planning of the Front Office Management team is Budgeting the Front Office Operations.<\/span><\/p><\/li>

  2. Every hotels Annual Operation Budget is a Profit Plan that addresses all Revenue Sources and Expense Items.<\/span><\/li>
  3. Annual Budgets are divided into Monthly Plans which in turn are divided into Weekly and Daily Plans.<\/span><\/li>
  4. The Revenue management team and accounting division plays a great role in forecasting the budget for the department.<\/span><\/li><\/ol>

    Note: It is marked that the Room Division Profits are usually higher than any other department; therefore it is very important to make an accurate room Budget as it is equivalent to creating a Budget of the hotel.<\/span><\/p>

    TYPES OF BUDGET<\/strong><\/span><\/h3>

    1-\u00a0MASTER BUDGET<\/strong>\u00a0\u2013 A master budget is a comprehensive projection of how management expects to conduct all aspects of business over the budget period, usually a fiscal year. Most master budgets include interrelated budgets from the various departments. Managers typically use these subset budgets to plan and set performance objectives. Master budgets are generally used in larger businesses to keep many managers on the same page.<\/span><\/p>

    2-\u00a0OPERATIONAL BUDGET<\/strong>\u2013 The operational budget covers revenues and expenses surrounding the day-to-day core business of a company. operating budgets are usually broken down into smaller reporting periods, such as weekly or monthly.<\/span><\/p>

    3-\u00a0CASH FLOW BUDGET<\/strong>\u2013 A cash flow budget examines the inflows and outflows of cash in a business on a day-to-day basis. It predicts a company\u2019s ability to take in more money than it pays out. Managers monitor cash flow budgets to pinpoint shortfalls between expenses and sales.<\/span><\/p>

    4-\u00a0SALES BUDGET-<\/strong>\u00a0 an estimate of future sales, often broken down into both units and currency. It is used to create company sales goals.<\/span><\/p>

    5-\u00a0REVENUE BUDGET<\/strong>\u2013 consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies.<\/span><\/p>

    6-\u00a0FLEXIBLE BUDGET<\/strong>\u2013 Flexible budgets are, as their names suggest variable and flexible depending on the variability in the results expected in the future. Such budgets are most useful for businesses that operate in an ever changing business environment, and have the need to prepare budgets that are able to reflect the many outcomes that are possible.<\/span><\/p>

    7\u2013 FIXED BUDGET<\/strong>\u2013 Fixed budgets are used in situations where the future income and expenditure can be known, with a higher degree of certainty, and have been quite predictable over time.<\/span><\/p>

    BUDGET CYCLE<\/strong><\/span><\/h3>

    The budget cycle refers to the life of a budget from creation to evaluation. it consists of four phases.<\/span><\/p>

    1- Preparing<\/span><\/h4>

    2- Approving<\/span><\/h4>

    3- Executing<\/span><\/h4>

    4- Evaluating<\/span><\/h4>

    FACTORS AFFECTING BUDGET PLANNING<\/strong><\/span><\/p>

    The following are the elements, which have an n, affects on the front office budget planning.<\/span><\/p>

    1.Accommodation:<\/strong>\u00a0This is one of the most critical key factors operating in hotels. When all the rooms are sold, it is impossible to increase the volume of room sales except through an increase in room rates. When the sales budget is being prepared it is essential to examine patterns of occupancy to establish what level of room sales may realistically be expected during the forthcoming budget year. Where there is a high degree of room sales instability, evidenced by pronounced swings in occupancy rates, it is desirable to examine the possibility of shifting demand from peak to off-peak periods.<\/span><\/p>

    2.Shortage of labour:<\/strong>\u00a0This particular key factor is potentially powerful, but there is no evidence that it exerts much influence on the volume of hotel and restaurant sales. In some locations, labour shortages may, in fact, be a severe limiting factor.<\/span><\/p>

    3.Consumer demand:<\/strong>\u00a0Consumer demand is often found to be a potent key factor. Its operation may be due to several reasons.<\/span><\/p>

    The price level of the establishment may be too high, and this may result in a low ARR or low occupancy or both.<\/strong><\/span><\/p>

    4.Quality of management:\u00a0<\/strong>The management and its operation however do not have a bearing over short period. Over longer periods, the quality of management will have a direct and powerful influence on the volume of sales generated.<\/span><\/p>

    5.Other factors:<\/strong><\/span><\/p>

    • Political state of affairs<\/span><\/li>
    • Natural calamities<\/span><\/li>
    • Terrorist activities<\/span><\/li>
    • Climate conditions<\/span><\/li>
    • Events (sports, festival celebration, etc)<\/span><\/li>
    • Importance of the city (climate, industries- IT, BPO, Biotechnology)<\/span><\/li><\/ul>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

      BUDGETING Budgeting is\u00a0the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. Budgeting is simply balancing your expenses with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":115,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"ocean_post_layout":"","ocean_both_sidebars_style":"","ocean_both_sidebars_content_width":0,"ocean_both_sidebars_sidebars_width":0,"ocean_sidebar":"0","ocean_second_sidebar":"0","ocean_disable_margins":"enable","ocean_add_body_class":"","ocean_shortcode_before_top_bar":"","ocean_shortcode_after_top_bar":"","ocean_shortcode_before_header":"","ocean_shortcode_after_header":"","ocean_has_shortcode":"","ocean_shortcode_after_title":"","ocean_shortcode_before_footer_widgets":"","ocean_shortcode_after_footer_widgets":"","ocean_shortcode_before_footer_bottom":"","ocean_shortcode_after_footer_bottom":"","ocean_display_top_bar":"default","ocean_display_header":"default","ocean_header_style":"","ocean_center_header_left_menu":"0","ocean_custom_header_template":"0","ocean_custom_logo":0,"ocean_custom_retina_logo":0,"ocean_custom_logo_max_width":0,"ocean_custom_logo_tablet_max_width":0,"ocean_custom_logo_mobile_max_width":0,"ocean_custom_logo_max_height":0,"ocean_custom_logo_tablet_max_height":0,"ocean_custom_logo_mobile_max_height":0,"ocean_header_custom_menu":"0","ocean_menu_typo_font_family":"0","ocean_menu_typo_font_subset":"","ocean_menu_typo_font_size":0,"ocean_menu_typo_font_size_tablet":0,"ocean_menu_typo_font_size_mobile":0,"ocean_menu_typo_font_size_unit":"px","ocean_menu_typo_font_weight":"","ocean_menu_typo_font_weight_tablet":"","ocean_menu_typo_font_weight_mobile":"","ocean_menu_typo_transform":"","ocean_menu_typo_transform_tablet":"","ocean_menu_typo_transform_mobile":"","ocean_menu_typo_line_height":0,"ocean_menu_typo_line_height_tablet":0,"ocean_menu_typo_line_height_mobile":0,"ocean_menu_typo_line_height_unit":"","ocean_menu_typo_spacing":0,"ocean_menu_typo_spacing_tablet":0,"ocean_menu_typo_spacing_mobile":0,"ocean_menu_typo_spacing_unit":"","ocean_menu_link_color":"","ocean_menu_link_color_hover":"","ocean_menu_link_color_active":"","ocean_menu_link_background":"","ocean_menu_link_hover_background":"","ocean_menu_link_active_background":"","ocean_menu_social_links_bg":"","ocean_menu_social_hover_links_bg":"","ocean_menu_social_links_color":"","ocean_menu_social_hover_links_color":"","ocean_disable_title":"default","ocean_disable_heading":"default","ocean_post_title":"","ocean_post_subheading":"","ocean_post_title_style":"","ocean_post_title_background_color":"","ocean_post_title_background":0,"ocean_post_title_bg_image_position":"","ocean_post_title_bg_image_attachment":"","ocean_post_title_bg_image_repeat":"","ocean_post_title_bg_image_size":"","ocean_post_title_height":0,"ocean_post_title_bg_overlay":0.5,"ocean_post_title_bg_overlay_color":"","ocean_disable_breadcrumbs":"default","ocean_breadcrumbs_color":"","ocean_breadcrumbs_separator_color":"","ocean_breadcrumbs_links_color":"","ocean_breadcrumbs_links_hover_color":"","ocean_display_footer_widgets":"default","ocean_display_footer_bottom":"default","ocean_custom_footer_template":"0","footnotes":""},"class_list":["post-6055","page","type-page","status-publish","hentry","entry"],"yoast_head":"\nBUDGETING AND ITS TYPES - 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