Sales budget and sales forecast are very important for sales and control of the management. The sales forecast will help the company to know about their expected sales in the specific time frame. The sales forecast will help in adjusting supply or demand for company’s products. The overstocking or under stocking problems can easily be avoided by good control over inventory using sales forecasts (Johnston and Marshall, 2016). The facilitation of sales can easily be reallocated or allocated using sales forecast. This also helps in determining required raw materials, financial needs, labour, transport facility or plant layout according to sales volume. This also helps in measuring the sales department or personnel’s efficiency. The sales forecast also helps the company in forming efficient budget for the company. The idle time is also reduced in manufacturing using the sales forecast.
Further, the sales budget also helps in forming sales programming which can help the company to achieve target for the sales. The resources can be easily allocated to products that will help in efficient forecasting of the sales. All the expenses for the company can easily be under controlled using the sales budget which can help in achieving the target related to net profits (Kotler et al, 2015). The sales performance as well as progress can easily be evaluated using the sales budget. The sales budget will also help the company in analysing the areas or products where the company is lacking and help in strengthening the position of the company.
There are basically two types of sales forecasting which can help in sales control that is short term and long term. Short term forecasting is mainly done for period of three or six months and one year. This also depends on the type of business operations of the company. Long term forecasting is mainly done for period of five, ten or twenty years and also depends on type of business of the company (Bogsnes, 2016). Top-down and bottom-up are the two methodologies by which forecasting can be done. Economic conditions, consumers, industrial behaviour, changes inside the company, or periods are some factors which can affect the sales forecast.
Further, budget for sales is mainly of three types that is sales budget, sales expense budget and administrative or profit budget. Sales budget planned in detailed manner in order to show expected sales based on revenues for future period. It is most significant part for master budget of the companies. Sales expense budget is planned budget which give expenses incurs by the department of sales for achieving the sales target. This budget includes salaries, commissions, entertainment expenses, training costs and travelling expenses (Hawkins, 2015). Administrative budget helps in allocating the budget for all the general expenses related to the administration of the companies. In some cases, when both selling expenses and sales budget are combined together in sales control form the profit budgets for the companies. Return oriented method, affordability methods, objective or task methods, percentage sales method or competitive parity are some methods of forming efficient sales budget for the companies.
Bogsnes, B. (2016) Implementing beyond budgeting: unlocking the performance potential.USA: John Wiley & Sons.
Hawkins, A. (2015) Managing budgets pocketbook.UK: Management Pocketbooks.
Johnston, M. and Marshall, G. (2016) Sales force management: Leadership, innovation, technology. UK: Routledge.
Kotler, P., Keller, K., Manceau, D. and Hémonnet-Goujot, A. (2015) Marketing management (Vol. 14). NJ: Prentice Hall.
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