Accounts and Finance
Step 5 Preparing Projections and Budgets

Discuss with Management about future plans

Especially enquire about

  • Approximate Fund Requirement
  • Existing Sales
  • Future sales to be achieved
  • Sales Product vise (Quantity, Rate, Amount) of different items
  • Domestic Sales and Export Sales component
  • Sales Order already received and to be received and when sales will start for these orders


Discuss with Production team about

  • Whether Company has the Production Capacity to achieve this sales
  • If no whether new machinery to be installed
  • Cost of Project (Purchase Price of Machine and Installation Cost)
  • Time Required for Installing Machine and Production to Start
  • Product Costing (Cost of Different Expenses for making one product)
  • Approximate Selling Price and margin on products


Discuss with Finance team about

  • Where will money come from for new machines?
  • If Loan taken for Purchasing Machine, how much loan required?
  • Amount to be contributed by Promoter/Friends/Relatives/Related Company
  • Rate of Interest on Existing and New Loans
  • Repayment Terms of Loan
  • Any Moratorium Period for Loan (No of months after which repayment will start
  • Existing Loans ,their Source of Funds and Rate of Interest


Ask Accounts team for

  • Audited Profit and Loss and Balance Sheet of Last few years with all schedules and notes
  • Current Year Provisional Profit and Loss and Balance Sheet till Date
  • (Suppose making assumptions in July, ask for Provisional Balance Sheet till 30 June)


Steps After Gathering Assumptions

  1. Note down all the points discussed and Compile them
  2. Send mail to different departments to confirm points discussed
  3. If some fresh points received ,include them also in assumptions
  4. On basis of decided assumptions, start making projections



(Note:-In small business ,all these may have to be discussed with a single person instead of whole team

Also some of these points may not be relevant or have to be modified depending upon type of business)

For example :- For Service Sector, there may be cost of providing service instead of cost of products)

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.