Metodologías para elaborar presupuestos y planes de inversión en Finanzas

Welcome to the Webinar

Introduction of the Speaker

• The speaker welcomes participants to the webinar hosted by the Real School of Business, introducing it as a tool for sharing insights on their operational methodologies.

• He introduces himself as a public accountant from Uruguay with extensive teaching experience, having spent 25 years at the University of the Republic in Uruguay.

• The speaker is also an author of a book on cost theory, which serves as a reference in both Uruguay and Argentina.

Professional Background

• He emphasizes his dual identity as both an academic and a vocational accountant, highlighting significant corporate experience with multinational companies in various sectors including beer production and healthcare.

• His roles included being a controller at Kimberly-Clark, known for products like Kleenex and Huggies, showcasing his involvement in major brands.

• He mentions regional responsibilities across South America while working in hospitality management and has experience in mining.

Academic Credentials

• The speaker notes his recent master's degree in commercial direction and marketing from Alde School, where he was invited to teach multiple subjects over several years.

Webinar Focus: Budgeting Methodologies

Overview of Budgeting Techniques

• The session will cover budgeting and investment planning methodologies that blend academic knowledge with professional experiences from various industries.

Importance of Economic Context

• He introduces the "cascading effect" methodology for developing budgets, emphasizing starting from higher organizational levels downwards.

• Understanding the economic and political framework is crucial; he highlights Latin America's instability affecting macroeconomic variables significantly.

Real-world Examples

• Citing Argentina's recent currency fluctuations as an example, he illustrates how macroeconomic changes can impact neighboring countries' trade relations.

• He stresses that social indicators should also be considered during budgeting processes. For instance, birth rates were analyzed when budgeting for diaper sales at Kimberly-Clark.

This structured approach provides clarity on key points discussed during the webinar while allowing easy navigation through timestamps for further exploration.

Understanding Economic Frameworks in Business

The Importance of Economic Indicators

• Economic indicators, such as birth rates, are crucial for establishing the economic framework within which a company operates.

• Recognizing these variables is essential for understanding how they will impact the business environment and the company's performance.

Strategic Planning and Budgeting

• Before delving into detailed budgeting, companies should start with a strategic plan that aligns with macroeconomic indicators and set objectives.

• Many multinational corporations operate on a five-year strategic plan while preparing annual budgets, emphasizing the importance of timely reporting.

Timing in Budget Preparation

• Companies often begin developing their budgets in October for the upcoming year, utilizing September and October to finalize plans and objectives.

• November and December are typically reserved for presenting these plans to headquarters for approval.

National vs Multinational Companies

• In Latin America, many medium-sized national companies do not require public listing to create effective strategic plans or budgets; this is a common misconception.

• Family-owned businesses can also benefit significantly from having structured budgeting processes regardless of their stock market status.

Action Plans and Resource Allocation

• When creating an action plan, it’s vital to consider four sources of information that will inform budget consolidation: sales projections, production budgets, service delivery considerations, and human resources needs.

• Sales forecasts must account for market competition while production budgets should reflect both industrial outputs and service-oriented processes like healthcare operations.

Sales Team and Strategic Planning

Team Composition and Action Plans

• Discussion on the desired number of personnel in the production team and those responsible for executing the strategic action plan, emphasizing that this involves minimal hiring or layoffs.

Budgeting Considerations

• Importance of understanding sales budgets, which are influenced by a cascading effect from resource budgeting, highlighting the need for strategic alignment.

Utilizing Historical Data

• Emphasis on using past information as a source for future planning but warns against projecting inefficiencies into future budgets.

Common Budgeting Errors

• Warning against the common mistake of carrying forward past inefficiencies into future projections, which undermines budget effectiveness.

Growth Projections Misconceptions

• Critique of simplistic growth projections based on historical data (e.g., multiplying 2019 sales by a fixed growth rate), labeling it as an aberration that ignores changing conditions.

Investment Plans and Their Impact

Integration with Strategic Planning

• The necessity of aligning investment plans with strategic objectives to ensure coherent budgeting processes.

Effects of Investment Decisions

• Explanation that significant investments will alter operational methods, impacting sales strategies and production efficiency.

Amortization Considerations

• Introduction of new machinery affects amortization costs in next year's budget, necessitating adjustments in financial forecasts due to improved resource optimization.

Interconnectedness of Budgets and Investments

• Highlighting how inserting an investment plan into a budget modifies its structure significantly; both must be integrated effectively to reflect true operational changes.

Continuous Adjustment Requirement

• Stress on the importance of continuously adjusting budgets alongside investment plans to maintain accuracy and relevance in financial reporting.

Financial Reporting and Investment Evaluation

Overview of Financial Statements

• The discussion begins with the importance of financial statements, including balance sheets and income statements, as essential formats for reporting to company owners or headquarters.

• It highlights that these formats are standardized based on international accounting standards, impacting countries like Spain and throughout Latin America.

• The output from budgeting processes typically includes income statements, balance sheets, and cash flow statements.

Importance of Cash Flow Statements

• Emphasizes the necessity of cash flow statements in assessing investment plans, particularly when determining how to finance significant investments.

• Discusses the need for a clear understanding of funding sources—whether through internal funds or debt financing.

Evaluating Investment Plans

Internal Rate of Return (IRR)

• Introduces four methods for evaluating investment plans; the first being the Internal Rate of Return (IRR), which should yield a positive present value when discounted against expected cash flows.

• Notes that global companies often have established IRR benchmarks that may not align with local economic conditions.

Net Present Value (NPV)

• The second method discussed is Net Present Value (NPV), where discounted cash flows must exceed zero to be considered acceptable by headquarters.

Cost-Benefit Ratio

• The third evaluation criterion is the cost-benefit ratio, calculated by dividing the present value of benefits by the present value of costs. A ratio greater than one indicates a favorable investment.

Payback Period

• Finally, discusses the payback period as an important metric indicating how long it will take for expected benefits to recover initial investments.

Investment Indicators and Budget Control

Understanding Investment Timeframes

• The investment indicator is expressed in years, indicating the duration for which an investment will be active (5 to 6 years), rather than as a numerical ratio.

• This contrasts with previous indicators that were presented as ratios or percentages, emphasizing the need for a time-based perspective in budgeting.

Importance of Budgeting and Control

• Creating a budget without implementing budgetary control renders the process meaningless; it’s essential to monitor progress against the budget throughout the year.

• Failing to project future paths and not controlling outcomes leads to inefficiencies and wasted resources.

Sincerity in Budget Creation

• Organizations must approach budgeting with honesty; inaccuracies can lead to ineffective financial planning.

• Using last year's figures adjusted by arbitrary percentages lacks validity; budgets should align closely with strategic plans.

Cascading Effect in Budget Control

• Effective budget control involves analyzing macroeconomic variables through a cascading effect, starting from broader economic indicators down to specific business metrics.

• For instance, understanding birth rates can inform market predictions, while currency fluctuations significantly impact financial forecasts.

Analyzing Sales Variations

• Sales analysis should consider both price and quantity variations; this helps assess how external factors affect revenue streams.

• The calculation of sales variations involves comparing actual sales against budgeted figures based on real prices and quantities sold.

Cost Analysis for Efficiency

• Evaluating variable costs is crucial for measuring production efficiency; this includes comparing actual costs against projected costs per unit.

• Fixed cost analysis often gets overlooked but is vital for comprehensive budget control; it ensures all aspects of financial performance are monitored effectively.

Webinar Q&A on Budgeting Techniques

Introduction and Invitation for Questions

• The speaker expresses gratitude for the attendees' presence and interest in the webinar, inviting them to ask questions during the remaining 15 minutes.

• Attendees are encouraged to submit their inquiries via a designated question icon, with an emphasis on addressing both specific web-related queries and broader academic concerns.

Zero-Based Budgeting

• A participant asks about zero-based budgeting; the speaker explains it involves creating a budget from scratch without relying on previous budgets or historical data.

• While this method avoids projecting past errors, it is noted as being highly resource-intensive to implement effectively.

Bottom-Up vs. Top-Down Budgeting

• A question arises regarding bottom-up budgeting; the speaker warns that this approach can lead to poor outcomes if not aligned with company goals.

• Emphasizes that understanding company direction is crucial when developing budgets, particularly in small businesses where owners may set arbitrary financial targets.

Revenue-Based Budgeting

• An inquiry about income-based budgeting leads to a discussion on calculating revenue based on price and quantity, highlighting the importance of analyzing these variables together.

Investment Evaluation Methodologies

• The speaker discusses investment evaluation methods like TEAR (Tasa Efectiva de Retorno), emphasizing its efficiency in justifying investments such as machinery purchases.

• It’s important to consider public economic rates plus risk premiums when determining acceptable return rates for investments.

Master Budgets and Strategic Planning

• A question about master budgets reveals they should integrate outputs like financial statements into a cohesive framework for consistency.

• The speaker recommends at least five years of historical data for strategic planning, especially for long-established companies lacking prior strategic frameworks.

Analysis of Financial Statements and Budgeting

Importance of Analyzing Financial Results

• Emphasizes the need to analyze financial statements month by month, focusing on various financial ratios.

• Highlights that creating a budget is essential for strategic planning and ensuring business continuity.

Revenue Projections and Sales Channels

• Discusses the technique of projecting revenue based on previous years but warns against assuming sales will remain constant across different distribution channels.

• Stresses the impact of sales channels on costs, noting that selling through different methods (e.g., direct vs. online) affects overall expenses.

Simplifying Complex Scenarios in Budgeting

• Acknowledges that real-world budgeting can be complex; thus, simplifications are often necessary for practical exercises.

• Mentions EBITDA as a useful tool for companies, particularly in understanding amortization and interest impacts.

Understanding Break-Even Analysis

The Concept of Break-Even Point

• Defines break-even point as the sales volume at which total revenues equal total costs, resulting in zero profit.

• Describes how this analysis serves as a critical tool for entrepreneurs to understand their cost structures and required sales volumes.

Practical Application of Break-Even Analysis

• Explains how knowing fixed costs helps businesses set realistic sales targets each month to cover these expenses.

Budget Monitoring Tools and Economic Context

Tools for Budget Tracking

• Lists various software options available for tracking budgets effectively, including ERP systems like SAP Business One.

Impact of Macroeconomic Factors on Businesses

• Advises starting budget analysis with macroeconomic indicators to understand external factors affecting business performance.

• Notes that economic downturns can significantly impact company operations, emphasizing the importance of adapting budgets accordingly.

Webinar Insights and Acknowledgments

Positive Indicators in Latin America

• The speaker highlights that isolated countries in Latin America are showing positive indicators, suggesting a potential for growth despite overall challenges faced by the region.

Gratitude and Acknowledgments

• The speaker expresses gratitude towards various individuals (Álvaro de Ron, Alejandra de Otto, Juan Carlos, Juan Herrera, Alfredo, Ulises, Matías, Susana, Maria Clara) for their participation in the webinar.

• Emphasizes appreciation for attendees' time and engagement during the session.

Educational Commitment

• The speaker shares their commitment to teaching and forming students within their business school.

• Recommends the business school based on personal experience with a master's program in marketing and media.

Invitation to Engage

• Concludes by inviting participants to contact the team at Alde to explore opportunities for joining the business school.

• Thanks attendees once again before wrapping up the session.