Preparation of budgets

Scope of Services

Our offer includes:

• Preparation of company budgets (individual budgets);
• Preparation of budgets for capital groups (consolidated budgets);
• Preparation of project budgets;
• Methodological verification of budgets;
• Consultations on budget preparation methodology.

The budget can be prepared either in spreadsheet format or as a separate document with a narrative section. An integral part of every budget is the set of assumptions adopted during the budgeting process.

The document can also be prepared in English upon request.

Budget Preparation Process

The budget preparation process is based on close cooperation with the client to ensure that the final document is highly reliable and has a realistic probability of implementation. Access to a wide range of financial data and various company documents is required during the budgeting process. Example documents used include:

• Quantitative reports of historical sales by product categories;
• Loan/credit/leasing agreements with repayment schedules;
• Full trial balances with detailed entries from cost accounts (Class 4 or Class 5 accounts);
• Full trial balances with detailed entries from revenue accounts (Class 7 accounts);
• Long-term cooperation agreements;
• Annual depreciation plans;
• Capital expenditure plans;
• Sales plans;
• Payroll information (e.g., using the so-called gross-gross standard);
• Information on planned sales prices by product categories;
• Grant agreements with payment schedules.

This list is illustrative and is individually adjusted to reflect the specific nature of the enterprise—for example, not every company is party to a leasing agreement.

Purpose of Budgeting

Budgets are prepared primarily for managerial purposes, to clarify what the company wants to achieve in a given year (e.g., financial results) and how it can be achieved (e.g., what revenue must be generated based on the projected cost level). Budgets also assess whether goals are realistic (e.g., whether replacement investments are feasible given liquidity constraints due to loan repayments). Budgets are compared periodically with actual results, this enables quick identification of problems or deviations from the plan and implementation of corrective actions.

Budgets are also used to evaluate the performance of management and employees. For instance, a salesperson’s bonus may depend on achieving a sales target derived from the budget, while the CEO's bonus may be linked to achieving the planned net profit.

Budgets serve as tools to maintain cost discipline. It is common to set a limit for a specific cost/expenditure category in the budget and ensure it is not exceeded. Such limits may apply to investment budgets, training expenditure budgets, or departmental budgets. Budgeted limits are effective negotiation tools within the company and provide an additional safeguard when delegating authority (e.g., allowing a director to make decisions independently, but only within the budgeted spending limit).

The budgeting and budget monitoring process enhances the financial and organizational awareness of managers. These processes provide valuable insight into how complex an organization is and how closely interrelated the activities of different departments are.

Moreover, the completed budget document serves as a starting point for preparing long-term financial forecasts, such as those required for loan applications.

Document Standard

A typical budget in our standard includes the following elements:

• Description of assumptions;
• Sales budget;
• Cost budget;
• Investment budget;
• Pro forma balance sheet on a monthly basis;
• Pro forma income statement on a monthly basis in either the cost of sales or comparative format (depending on the format used by the company);
• Pro forma cash flow statement on a monthly basis.

This structure can be modified to reflect the specific characteristics of the enterprise.

Geographical Scope of Services

We provide services throughout Poland. For clients located outside the Lublin region, meetings are conducted online (via MS Teams), and documents are exchanged electronically.