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Tuesday, 23 June 2015

Planning and budgeting is key to cooperative success

By Bob Aston
Proper planning and budgeting is key to growth of Laikipia Produce and Marketing Co-operative Society. Speaking during a two days financial management training organized by Arid Lands Information Network (ALIN) for the committee members of the cooperative on June 17-18, 2015 at Ng’arua Maarifa Centre in Ol-Moran Ward, Laikipia West Sub County, Ms. Roseline Ngusa, ALIN Finance and Administrative Manager said that the first step to an effective financial planning is developing and implementing a budget.
She said that a budget is a detailed summary of estimated income and estimated expenses for a given period and will be an invaluable tool that can help the cooperative to prioritize their spending and manage their money-no matter how much or little they have.
 “Planning and monitoring your budget will help you identify wasteful expenditures, adapt quickly as your financial situation changes, and achieve your financial goals,” said Ms. Ngusa.
She said budgeting will help the cooperative to limit how much money is spent on certain operations. It will help the cooperative to create a financial roadmap and they can use the budget to plan for future business growth and expansion.
Subsidized government fertilizer being offloaded into the cooperative store
She encouraged the cooperative to use variance analysis in planning, controlling and performance evaluation of the cooperative. She said that essentials of a budget include: plan expressed in monetary terms; prepared prior to a defined period of time; and is related to a definite future period of time.
Benefits of a budget include: the cooperative will be in control of its money; cooperative will be focused on its money goal; it is a communication device; it will provide the cooperative will an early warning for potential problems; will help in coordination of cooperative activities; is a control tool; and is a performance evaluator.
“Proper planning will provide venue and process for stating the direction and financial objectives of the cooperative. Setting up proper controls is also useful in ensuring that plans and objectives as laid down in the budgets are being achieved,” said Ms. Ngusa.
She said that the cooperative should be preparing different budgets which include: income and expenditure budget which outlines recurrent costs of the organization and shows where the money will come from; capital budget which shows a list of expenditure the cooperative intends to make for the coming years on capital projects; cash flow budget which is a key aspect of financial management of a business, planning its future cash requirements to avoid crisis of a liquidity; and activity budget which is prepared for a given activity.
ALIN has been offering various capacity building trainings to the cooperative members since its formation in 2013. This has enabled the cooperative to be among the leading cereal cooperatives in Laikipia West Sub County.
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