Forecast Sales: The first step in the budgeting process is to estimate the expected sales for the upcoming period. This is typically based on historical data, market trends, and sales projections. For instance, Reliable Company has forecasted consulting service sales of $$190,000$ in April, $$200,000$ in May, and $$205,000$ in June.

Estimate Operating Expenses: Next, the marketing department will estimate its operating expenses, including fixed costs $($such as salaries, benefits, and website operations$)$ and variable costs $($such as online advertising and subcontractor expenses$).$ For example, the department$$s monthly expenses are forecasted at $$48,000$ for salaries and benefits, $$21,000$ for website operations, and $$15,000$ for advertising.

Calculate Cash Collections and Disbursements: The department will then project cash inflows and outflows. This includes estimating how much of the sales will be collected in the current month, the following month, and the month after. The department will also account for disbursements like commissions and subcontractor expenses.

Prepare Financial Budget: After estimating the operating budget, the marketing department will prepare the financial budget, which includes forecasting the cash flow, identifying funding needs $($e$.$g$.,$ loans or equity$),$ and planning for capital expenditures. This ensures that the department can meet its financial obligations and plan for future investments.

Review and Adjust: Finally, the budget will be reviewed and adjusted for any discrepancies or changes in assumptions. The marketing department will compare the budgeted figures with actual results periodically to monitor the performance and adjust as necessary.

Market Department Master Budget $$ June