Five Budget Management Models for Wallpaper Development

Comprehensive budget management connects the market and the company. Under different market conditions, wallpaper companies are at different stages of development, with different management priorities and different modes of overall budget management. Therefore, when wallpaper companies design their own comprehensive budget management models, they should choose their own budget management model according to their own environment and conditions, highlighting the key points of management in different periods. Experts believe that they can be divided into five major budget management models: capital expenditure budget management model, sales-based budget management model, cost control budget management model, cash flow budget management model, and target profit budget management model.

I. Capital expenditure budget management model

In terms of operating characteristics, the capital expenditure budget management model involves a large amount of cash investment in R&D, market research, and fixed assets. The net cash flow is negative. The success or failure of new business development and the magnitude of future cash flow have greater uncertainty. , face greater investment and business risks. In general, the company's initial period, the early stage of marketing work, project launch, and the initial investment in large-scale regional infrastructure construction.

From the perspective of the capital budget management model, the wallpaper company's investment budget has begun to intervene in the entire process of management. The budget is centered on capital investment, actively making investment estimates, using financial decision-making techniques to evaluate capital expenditure projects, total project investment budget and various periods of cash Outflow total budget. ** Budget, use the above-mentioned various budgets to monitor and manage the actual construction process, and evaluate the actual expenditure effect of capital expenditure projects against the capital budget.

Second, the capital expenditure budget management model

Judging from the operating characteristics, the capital expenditure budget business is gradually accepted by the market, and the total market demand has risen. The center of management is to develop market potential through market and marketing, increase market share, and invest a lot of marketing expenses. The size of cash inflows is still uncertain and the net cash flow is negative or at a low level.

The main contents of the capital budget management model include the establishment of a sales budget based on market demand and sales forecasts based on the market. Persist in the principle of "distribution based on sales" to compile the budget for production, costs, expenses, and other functions. Rely on the budget of each function and prepare a comprehensive financial budget. From the point of view of the budget mechanism, the management under the budget model focuses on marketing management. The advantage is that it can organize the various production and business activities within the company around the center of market demand, making the budget more objective and able to play well. The role of the plan; the disadvantage is to overemphasize the objectivity of market demand, may ignore the excavation of internal potential, increase the conflict of interests between owners and managers.

Third, cost control budget management model

From the point of view of operating characteristics, the growth of the cost control budget market has slowed down, with a relatively high and stable sales share. In the case of a relatively stable wallpaper business field, the size of the profit depends on the relative controllability of cost. The cost management strategy affects the level of expected profit, and the net cash flow is positive and relatively stable. This is a stage in which a business develops to a relatively mature stage. Many costs have historical data to support, and you can use history to evaluate many current cost behaviors. However, due to changes in many costs and changes in materials, or changes in some processes, so that it is not referenced.

The inherent logic of the capital budget management model, since the market price is basically stable, companies must tap their potential in terms of cost in order to obtain the expected return. Emphasizing that cost management is the core and main line of enterprise management. Based on the company’s expected revenue, the company plans to use the market price as a known variable to plan the total budget cost of the company. Based on the total budget cost, it is decomposed to all responsible units that involve cost The management department forms a sub-budget cost that constrains the management behavior of each budget unit. The budget system centered on the target cost applies to a long product life cycle, and product development is in a mature period. The market demand is relatively stable, and the enterprise's competitive advantage mainly comes from lower costs. General hydropower station operations, thermal power plant operations, and per capita production capacity are supported by well-established historical data. It is generally estimated that a given staff member and staff member should be separated from each other.

Fourth, cash flow budget management model

From the point of view of operating characteristics, the financial characteristics of the cash flow budget management model are the recovery of a large number of accounts receivable, while the potential investment projects have not been determined and generate a large amount of net cash flow. For fast-moving consumer goods or alcohol products, including some of the fiercest models proposed by many virtual manufacturers, the cash flow has reached the concept that cash is king. Once it breaks, it dies quietly.

The capital budget management model is based on the control of cash inflows and outflows. Through the planning and control of cash flow, it can control various production and business activities within the company. It is more applicable to the rapid development of business, enterprise management in the expansion phase of the enterprise management, or the internal control of large enterprise groups.

V. Target profit budget management model

From the point of view of operating characteristics, in order to extend life “infinitely”, the company with target profit budget management mode must inevitably diversify and serialize development of the business so that the management model of the group can be developed. How to use the advantages of the Group as a whole for the management and performance evaluation of different subsidiaries and branches is the primary issue for wallpaper company management. The capital budget management model starts with setting the target capital profit rate, and strengthens the control and assessment of subsidiaries and branches through the budget management model that uses the target capital profit rate as the starting point.

In the actual work of wallpaper companies, the overall classification of budget management is not absolute. Usually, various budget management models are intertwined to form the company's budget management system. Regardless of which budget management mode a wallpaper company chooses, it is ultimately necessary to realize the company’s target profit and reflect the company’s overall value-added services.