Memo
To:
From:
Date:
Subject: budget preparation for property Management Company
As the manager of property Management Company, I would like to take this opportunity and welcome you in budget preparation for the coming year. I would like all of us to take this time and plan our objectives, financial plan, and funds allocation in order to achieve important details and specifics and control our future operations. This is the high time our company should have a planning on resource constraints and projected cost on different areas. Generally, in preparing the operating budget for the company, property managers should focus on estimation the organization revenue and expenses. You should set the budget from bottom top and estimate how much expenses are required in operation into order to make revenue (Shim, Siegel, & Shim, 2012). On this point, it is important you note that you should divide operating expenses in two categories namely manufacturing and non-manufacturing costs. First, I would the like the property managers to prepare a periodic report on operating and financial budget in a PowerPoint presentation and it will be forwarded to me after one month since a monthly budget will help in planning and control. When you approve the budget, release it with workflow approvals and in a controlled fashion. While preparing the budget, it is important you concentrate on cash flow forecasting and you can use the time period to extend budget and costs. Also remember to keep the print of each project for conducting assessment with other periods (Shim, Siegel, & Shim, 2012). For operating budget, you should provide sales budget, production budget, and budget for direct materials as well direct labor. On the same note, you should also provide an income statement expense which includes manufacturing expense such as indirect labor and depreciation expense. For financial budget, you should include cash budget and pro forma balance sheet.
The important thing in property management budget is cost management; thus, you should forecast the financial success of the project. The budget should deliver a Web-based system which will be applied in budget development (Kohn & Katz, 2002). Therefore, you should organize a detailed budget with scope breakdown and manage contracts. Note that a budget with accurate cost system will provide an accurate data. While preparing the budget, you should have an insight of anticipated cost in order to be in a position of tracking changes. On the same note, it is important you clearly understand the project activities and this will help you to show up all the financial metrics (Kohn & Katz, 2002). For the company to forecast the project measurements, you should provide a clear cash flow budget and a one with Earned Value capabilities. Focusing on project scope, the budget should include logical groupings which relates with scope of the scope. Other thing which should be included is hierarchical coding and on this point you should create Work Breakdown Structures which line up with organizational principles. Note that each cost elements will acquire multiple codes if you create flexible coding. While preparing the budget, you should put into effect the grouping capabilities so that you can come up with a flexible cost reporting. The budget committee should take their responsibilities and estimate budge in each segment in order to make recommendations, necessary revisions and final approve of disapproval (Kohn & Katz, 2002). During the process of preparing the budget, the committee should also provide any advice which may be needed in gathering financial data.
The other important part of the budget would be the administration of the budget. Each property manager shall be required to compile a divisional budget that shall be consolidated in a binder to make up the executive budget. The managers are requested to pick the budget instructions, forms and timetables at my office that have been designed in a simple format that is easy to follow. For further guidelines on how you shall prepare and present the budget, each manager shall be required to go through the budget manual which has detailed the budget requirements. The presentation of the individual budgets shall be done using information reports which shall assist the planning and formulation of expenditure strategies (Shim, Siegel, & Shim, 2012). On the reports, each person is required to present the costs, the income and the predicted profits in the various prescribed units. The cash flows should be in U.S. dollars while the profits shall be presented in percentage form. Informative ratio must also be included in the comprehensive summaries of each budget so as to give a clear distinction between the costs and the income. In addition, the informative summary shall include various variables including the percentage of capacity utilization the changes in the selling and marketing price as well as the variation of the sales volume (Shim, Siegel, & Shim, 2012). Cooperation of the highest standard shall be required implying that each person must comply with the policies and procedures of the company during the budget preparation. Lastly, each person is expected to provide a realistic budget that covers the broad range of the company’s objectives and the goals of the company with respect to the strategic and operational plan of the company.
Reference
Shim, J. K., Siegel, J. G., & Shim, A. I. (2012). Budgeting basics and beyond. Hoboken, N.J: Wiley.
Kohn, A. E., & Katz, P. (2002). Building type basics for office buildings. New York, NY: Wiley.
