Page 56 - Budgeting for Managers

billed but are not yet overdue. In this example, the age is meas-
ured from the transaction date. Most outstanding accounts
receivable are less than 10 days old and 90% are less than 30
days old. That means that you have very little to worry about in
collections. The Parts of a Budget 39
Accounting can provide detail on this report. For example,
you might want a copy of the invoices for amounts due over 45
days. Perhaps you have a rule that you will not accept orders
from customers with accounts 60 days past due and it’s time to
give some customers a friendly reminder.
The Manager’s Checklist for Chapter 2

❏ Your budget should be based on what you’re going to do,
your vision, and not on last year’s numbers.
❏ Short-term budgets, one year or less in length, are for
planning and tracking.
❏ Long-term budgets, longer than one year, are just for plan-
ning.
❏ You can prepare long-term budgets by asking if expenses
are fixed, variable, or partly fixed and partly variable.
❏ You can average expenses that vary a great deal or you
can plan them more accurately.
❏ In estimating income, you need to think about current cus-
tomers buying what they’ve bought before, vertical servic-
es (new items for current customers), and marketing to
bring in new customers.
❏ You can make good estimates and also manage well using
SWOT: an evaluation of strengths, weaknesses, opportuni-
ties, and threats.
❏ Budgeting is easier if you understand accounting basics,
including account codes, transactions, and balancing and
reconciling accounts.
❏ You need to be able to track your actual expenses against
your estimates.