[SOUND] Hi, welcome back. We resume the topic of forecasting revenue in this video. What if your company business model is also based on the medium to long term contracts? As we discussed before, a contract based revenue budget would be in place, let's see again the example. In this model of revenue budget, we should necessarily consult sales people, not only because of the B2B nature of the business, but especially, because new prospects are not in the radar of corporate managers, but they surely are in sales people's radar. New customers, or contracts should be in the revenue budget. At this point, you might have noticed it. Some areas of the company carry on responsibility to support revenue budgeting. These areas are available sources of information. Remember, an integrated budgeting process relies on participation of many different areas. But about what areas are we talking about? Well, we can supply and purchase with information about cost of materials and potential supply constraints. We can think about also the engineering area with information about new product developments, the possible launch dates and new features for existing products. We have also production with information about lead times to deliver the products to customers. The production throughput and production constraints and we have marketing and sales with information about product lifecycle, new products launch, product substitution, competitive intelligence, consumers' behavior, market trends, incentives program change, and salespeople training. And what about the financial area? With information about credit rating, consumers' default rate, minimum attractive return. Human resource with information about the available of qualified people, training costs, performance management, and staffing costs. We also have contracts and legal, with information about regulatory issues, costs of transactions, contracts, renewals, or closing. And also we have the CEO or the general manager. For example, with information about strategic decisions to accelerate or to delay the portfolio exponential. The company might be prepared to do whatever the company would do. But as a strategical guideline, the CEO can do something different. Some issues also influence on revenue budget. Let's talk about them. The company may have constraints to achieve expected revenue. It may be due to limited trained staff. There may be even a lack of qualified professionals in the market. If the company business is capital goods, I'm talking about another example, then the selling cycle is longer which may lead to a conservative selling process. In this case, the revenue cycle will be long and may present a book variations. The challenge is to estimate the revenue behavior in such contents. Either way, we must do it. Again, this is another argument to reinforce the advice. Talk to sales people. Remember also the major sources of constraint for the company. If an increase in capacity of production is to be made, pay attention to this picture roll out such increase, the company may not have enough people to do it in a short time. In the company, they also have to deal with technological issues or with legal aspects to be able to develop its projects. So a wise question to answer is, what is the time horizon for which you can develop a useful forecast? If the sector of the company's wanted to show some stability, then maybe you could forecast a full year of revenue. On the other hand, if the sector is too dynamic, maybe you would forecast only a quarter, and review the forecast with a sliding window of one-quarter. In such a case, forecasting for longer term, quarters would be roughly estimated. Finally, consider the development, detailed revenue forecast for the long-term period in a very dynamic sector is as time consuming as it may be useless. Well, we have finished with revenue budget. Prepare for the next step, and we'll go through production and inventory budgets. See you soon, bye. [SOUND]