The investment in fixed assets and working capital of cement enterprises is large and the rate of return is low, and many cement enterprises have to rely on expanding the scale of operation to obtain operational benefits, which is highly likely to put the enterprises in difficulties if they encounter no timely recovery of funds. Reasonable and standardized budget management and its implementation are of practical significance to prevent the capital crisis of cement enterprises, strengthen the internal control of cement enterprises, maintain the normal operation of enterprises and improve economic efficiency.

The value of cement enterprise budget management

The value of implementing budget management in cement enterprises is mainly reflected in three aspects: strategic management, risk control and performance assessment.

(A) Strategic value of budget management

Like other enterprises, the comprehensive budget management of cement enterprises, while allocating resources, combined with enterprise performance management, allows the management of enterprises to efficiently coordinate all aspects of enterprise finance, marketing, investment, production, etc., so that all departments in a clear division of labor, coordinated and unified work, and mobilize the enthusiasm of production between departments and employees, so that the enterprise is invincible in the competition and To promote the realization of the long-term goals of the enterprise.

(B) the value of budget management risk control

Cement enterprises through the implementation of budget management, and in the implementation process of continuous improvement and control, the purpose is to minimize the risks in the production and operation of enterprises. Through budgeting, all departments are urged to prepare feasible plans in advance to reduce the financial and operational risks caused by the blind development of enterprises. From the current situation, the process of budgeting and execution will constantly prompt the enterprise to balance its business development environment and ensure that all resources of the enterprise are unified with the development goals.

(C) Performance assessment value of budget management

For each department of cement enterprises, budget indicators are used as performance evaluation standards for management and employees, and this results in quantitative assessment standards for employees and the implementation of reward and punishment mechanisms, thus effectively controlling and motivating employees. Budget management regulates the daily activities of each department and its employees, so that the business activities of the enterprise have goals to follow and a system to follow, eliminating the phenomenon of changing orders and activities at will.

The specific content of the cement enterprise budgeting

Cement enterprises must have a comprehensive understanding of market demand, cement enterprise budgeting on the basis of a clear need for the development of the enterprise itself. Budgeting involves all aspects of enterprise production and operation, mainly including operating budget, capital budget and financial budget management, etc.

(A) Operation budgeting

1. Sales plan preparation. The sales budget is the starting point of the whole budget, and all other budgets are based on the sales budget. Usually the sales department prepares the sales budget on the basis of the national policy and market research, market forecast, and the actual production capacity of the enterprise. Sales budget can be prepared according to sales volume, sales price and sales revenue respectively.
2. The preparation of production and unit consumption plan. Cement enterprises in the production plan, raw material unit consumption plan, clinker unit consumption plan, cement unit consumption plan preparation, the production department must refer to the actual economic indicators of the previous year, comparison, analysis, to determine the main economic and technical indicators of the year. The economic and technical indicators include the unit consumption indicators of various raw materials and combustion materials, the capacity indicators of various production equipment, the output indicators of sub-species of finished products, etc. The key KPI-related indicators involved are: output, capacity utilization rate, kiln and mill operation rate, clinker consumption ratio, ton of coal consumption, ton of electricity consumption, etc., so that the production department can decompose the key indicators layer by layer and assign them to relevant departments, processes and sections.
3. Cost plan preparation. According to the production plan, manufacturing cost plan and repair cost plan of the year, the production department will determine the repair cost, variable cost and manufacturing cost of each major finished product in the budget year, based on the actual unit consumption of process cost and cost improvement measures, involving key KPI-related indicators: variable manufacturing cost of tons of products, tons of repair cost, tons of coal cost of products, tons of electricity cost of products, etc., especially for production equipment Especially for the repair of production equipment, such as the replacement of refractory bricks of rotary kiln, the replacement of mill speculative plate and the consumption of steel ball and steel section, etc., the time of repair and the quantity and amount of consumption should be reasonably budgeted to ensure the controllability of the budget.
4. Material procurement plan preparation. The material supply department prepares the budget annual procurement plan according to the material consumption and demand plan provided by the production department, including the procurement budget price of main materials, quality index, procurement channels, procurement quantity, approved stock quantity, and turnover rate of accounts payable. The procurement department forecasts the procurement of raw materials required for production, especially raw materials that account for a large proportion of production costs, such as coal, limestone, clay, iron slag, furnace slag and other material supply and price trends, to conduct a comprehensive survey and understand the situation, to provide accurate prices for the budget.
5. Wage and personnel plan preparation. Wage plan and personnel plan is mainly prepared by the Human Resources Department according to the actual situation of the company combined with the “three definitions” work, determine the personnel quota, measuring the total wage and salary personnel costs. The wage plan includes employee benefits and personnel training plans to improve the quality of personnel and professional skills, indirectly reduce human resources costs and improve the productivity of the enterprise.
6. Expense planning. Expense planning includes the preparation of management expenses, sales expenses, financial expenses, etc. Cost planning should be done by the management department, sales department and finance department in cooperation. According to the different cost habits, expenses can be divided into controllable expenses and uncontrollable expenses. Among them, controllable costs must be linked to business volume for control, and uncontrollable costs are determined based on the principle of total control. The key indicators involved in the cost plan, such as the three costs of tons of products, are decomposed and implemented by the relevant departments for the relevant costs, and the implementation is taken as the basis for departmental assessment.

The budget decomposition of sales and management expenses should follow the principle of “quantified indicators and thorough decomposition”. For example, office expenses should be subdivided into communication expenses, daily office expenses, utilities, purchase of desks and chairs, etc. Daily office expenses should be subdivided into paper and paper. Daily office expenses should be subdivided into paper, photocopying, newspapers and periodicals, office equipment maintenance, etc. Communication costs should be subdivided into fixed-line, fiber-optic, cellular, and network costs. Utilities costs should also be subdivided into water, water resources, and electricity. The breakdown should distinguish fixed costs, variable costs, and semi-fixed costs. Costs are decomposed in accordance with the principle of management by the department to which they are attributed, and the responsibility for cost control is put in place.

Financial expenses are prepared by the finance department according to the current borrowing amount to accrue interest and expenses handling fees. The budget of financial expenses is adjusted by accruing interest according to the prepared financing plan and the amount of financing.

(B) Capital budgeting

Capital budgeting mainly includes the preparation of project investment plan, fixed assets acquisition plan and intangible assets acquisition plan. Based on the development plan of the company and the special plan of specific projects, the development department of the company prepares the project investment plan, predicts the overall investment scale of the project and the annual capital expenditure for civil engineering, installation works and equipment investment. According to the scheduled construction period, the project schedule is formulated, the investment budget is arranged, and the completion of the project is expected to be put into operation, making it possible to prepare production and operation plans and financial budgets, and to arrange annual production and sales plans and capital expenditures based on this relatively accurate basic information in order to balance the cash flow budget. 　　

(C) Financial budgeting

Financial budgeting consists of projected income statement, projected balance sheet and projected cash flow statement, which mainly reflect cash receipts and disbursements, financial position and operating results. The cash flow statement consists of cash receipts and cash expenses. Cash receipts mainly come from sales revenue, and expenses mainly include purchase of raw materials, payroll expenses, paid manufacturing expenses, selling expenses, management expenses, financial expenses and asset acquisition expenses. The projected income statement is based on the preparation of budgets for sales revenue, cost of goods sold, selling expenses, administrative expenses and financial expenses. The projected income statement is prepared to understand the profitability level of the enterprise and to adjust the budget of the department when the budgeted profit differs too much from the target profit of the enterprise. The projected balance sheet is prepared by adjusting the budget data of sales, production and investment based on the balance sheet at the end of the previous year, and the purpose of preparing the balance sheet is mainly to reflect the financial status of the enterprise.

Specific implementation of the cement enterprise budget management

A perfect budgeting, if not well implemented, will cause the weakening of the budget management function, and even make the budget become a piece of paper. Therefore, it is necessary to establish a perfect budget management assessment and evaluation system, and establish relevant incentive mechanisms, budget monitoring and adjustment management mechanisms.

(A) Improve the budget management documents to have rules to follow

Perfect management documents are the basis for ensuring the quality of budget management. These management documents include market research procedure documents, procedure documents for determining enterprise development goals, budget preparation procedure documents and corresponding operation instructions; including budget execution procedure documents, budget adjustment procedure documents and corresponding operation instructions; including budget execution evaluation procedure documents and their operation instructions, etc.

In addition to this, a scientific and reasonable incentive system should be established. A clear incentive system can make budget executors understand the close relationship between their performance and rewards before budget execution, so that individual goals and overall corporate goals are closely integrated, thus making budget executors consciously adjust and restrain their own behavior, work hard, improve efficiency and fully complete corporate budget targets.

(B) Clarify responsibilities and index allocation, and establish index responsibility assessment mechanism

In order to achieve the synchronous leap of economic efficiency and total economic volume, and to realize the coordination of survival and development, cement enterprises should seize the market externally, optimize the product variety structure and strengthen marketing integration; internally, they should reduce costs and dig benefits from both technological innovation and management improvement, and digest objective unfavorable factors. According to the budgets, the indicators will be decomposed to each department and workshop, establish the responsibility assessment mechanism of indicators, and timely scheduling and control to ensure the implementation of the budget indicators and the achievement of the overall goal.

(C) Strengthen marketing management and timely recovery of funds

Improve the quality of marketing as the core work to grasp, deal with the relationship between the total amount of marketing, structure, selling price, enhance market forecasting and regulation ability. Make full use of national policies to enhance the profitability of products and make up for the impact of other unfavorable factors. Establish customer evaluation index, credit evaluation for each customer, select high-quality customers for sales, ensure timely return of payment, guarantee the safety of funds, and do the basic management of marketing business.

(D) set up a budget management inspection team to ensure the implementation of the budget

Cement enterprises should take the cash budget as the core, do a good job of balancing and scheduling funds to ensure budget execution. In specific operations, cement enterprises can set up project inspection groups. On the one hand, focus on the management of production and operation projects, and their funds, to ensure that all projects are implemented in strict accordance with the budget, and effectively control financial risks; on the other hand, strengthen the monitoring of the budget implementation of each department, and timely adjust the budget according to the changes in reality, to ensure the completion of the main objectives of the enterprise.

(E) Conduct budget execution evaluation and improve budget management system

The concrete implementation of strict budget execution evaluation and reward and punishment system is the key to ensure the quality of budget management. The budget management inspection team must strictly review and evaluate the implementation of budget management and, on the basis of the evaluation of budget execution results, assess the budget completion, the accuracy and timeliness of budget preparation, affirm the achievements and identify the problems, and discuss with the budget executors to propose specific measures to improve budget management and promote the improvement of the enterprise budget management system.

At the same time, the budget management inspection team must also implement rewards and punishments for the specific situation of budget execution assessment in strict accordance with the spirit of the incentive system documents formulated by the enterprise. Thus, it helps employees to develop good habits of implementing budget management in strict accordance with relevant management documents, improves employees’ budget management literacy, and strengthens the control power within cement enterprises.

To sum up, for cement enterprises, scientific budget management is particularly important, and the implementation of budget management is directly related to the survival and development of cement enterprises. The budget management of cement enterprises should, first of all, formulate perfect budget management documents, establish an index responsibility assessment mechanism, assess the credit rating of customers, select high-quality customers, and ensure the timely return of funds; set up a budget management inspection team to evaluate the implementation of budget management in enterprises, and make rewards and punishments according to the assessment, in order to motivate employees to improve their work quality and promote the development of enterprises.