Just about every company must undertake annual efforts to forecast their financials and create a budget. But not everyone is happy about it. In fact, the results of a global survey of 138 CFOs and other finance executives released this past summer by management researchers and practitioners CEB indicated that 82% of respondents were “dissatisfied” with the time committed to the forecasting/budgeting process.
Do you find yourself humming a familiar tune of frustration through gritted teeth while trying to set your business budget every year? If so, the CEB’s report did offer a few tips on potentially getting more out of the process. These include:
Target variances. The report advised companies not to overrely on purely accounting-driven budgeting techniques. Rather, as mentioned in the main article, targeting likely risks — or “variances” — should play a central role in constructing a sound budget.
Buy into “buy in.” It may be a management cliché, but the report issued a reminder of how important it is that everyone on the executive team agree on common forecasting goals before getting underway. Too often, the stated objective is to “create a budget” without everyone buying into the roadmap for getting there.
Keep it simple. The report pointed out that many companies are trying to tie business improvement and strategic planning initiatives into the forecasting/budgeting process. This can lead to confusion and unexpectedly high demands of time and energy. Remember, you’re looking to set a budget — not fix every minute aspect of the company.