CREATE 3 MORE YEARS OF CASH FLOW STATEMENT (7 HOURS)

Memorandum

Due to the need of creating a strategic plan, Huffman Trucking has come up with a team of key players whose intellect and know-how is essential in order to come up with a viable and profitable strategic plan. These team players will not only assist in making progress but also come up with a plan, which will make us a cut above the rest.

The FY12 marketing department budget was created in conjunction with sales forecasted from the new strategic directions memo. A total estimation was made on the total existing headcount based upon past experience in a corporate environment since there were no detailed cost center numbers provided in the Intranet site for Huffman Trucking. Open headcount positions listed on the human resources website were accounted for in the FY12 budget as well as the associated benefits costs by using external sources to estimate the approximate salary per position. Department expenses were projected using external sources for the amount of funds required to build an effective marketing plan. Marketing is a function of sales and with the new initiative launch is it highly recommended that the marketing budget not exceed 15% (Johnson, 2010). The total budget in normal course of business should not exceed approximately 9.1% of total sales (Miller, 2014).

The operations department has many assumptions to consider in preparing the FY12 budget. There will be multiple cost considerations for operations. There will be an overall 4% inflation on expenses, and a large portion of the operating expenses is variable. Cash flows will need to be monitored often to ensure these expenses are managed accordingly. Additionally, there will be new spending areas for added satellite warehouses. Using the estimated sales for the year, income from any other sources, and expenses including any projects, the sum total of cash inflows and totals of cash outflows can be determined. Understanding when these inflows and outflows will occur is important as well. Once this information is determined, the departments can create cash flow budgets as well.

The human resources department has taken into consideration the budget for the other departments. Some cost of operations for other departments also overlaps into human resources. Additionally human resources need to factor in the added cost of hiring, recruiting, training and drug testing fees especially with a high turnover rate for drivers. The human resources department must also consider the cost of operating the new satellite warehouse, the cost of space rental and the cost of running the new location in general. This department also must consider the cost of depreciation of assets and possible replacements. This budget also may cover any additional miscellaneous expenses not covered by any other department.

As a result, the financial team has come up with spreadsheets for the departmental managers to complete. These spreadsheets are in important as they are the ones which will help us to budget ourselves and also come up with the best strategic plan. All departmental managers are therefore asked to complete the spreadsheet and submit them without fail in one week’s time.

A cash flow budget will be included in the strategic plan along with a proforma income statement and balance sheet in order to see all incoming and outgoing costs associated with cash. We will constantly monitor the cash flow so we know if we are being efficient or not. Seasonality will decide the timing of the cash in and cash out based upon consumer demand and repayment of accounts receivable to the organization.

In conjunction with the cash flow budget, all other financial aspects of the organization will be constantly monitored at Huffman Trucking to maintain efficiency and profitability.

Thank you all for your cooperation!

Best regards,

Huffman Trucking

References

Johnson, H. (2010). How to build your marketing budget. Retrieved from

http://www.inc.com/guides/2010/09/how-to-build-your-marketing-budget.html

Miller, J. (2014). A better way to set your marketing budget for 2014. Retrieved from

http://www.inc.com/jon-miller/setting-your-marketing-budget-how-to.html