Focus on budgeting (2011 update)

Despite its controversy, budgeting emains entrenched in financial management. An important tool for formulating and monitoring strategies, budgets continue to be formulated around negotiations based on the previous year’s figures.

CIMA’s Official Terminology of Management Accounting defines a budget as “a quantitative statement for a defined period of time, which may include planned revenues, assets, liabilities and cash flows. A budget provides a focus for the organisation, aids the co-ordination of activities and facilitates control”.

Although budgeting tends to come into play when a business takes on professional finance managers, CIMA’s Peter Simons argued even the smallest SMEs budget on their own terms. “Driver based budgeting and forecasting (for example, the window cleaner’s streets, doors and houses cleaned) have the advantages that they can provide a more accurate projection of financial outcomes,” he said.

For more background on all of these aspects of budgeting, follow the links below:

Expert Guides

• IT Zone guide to budgeting systems (2007)
• Spreadsheets - just say no!
• Traditional budgeting under the microscope
• Using product information to inform business strategy
• Opinion: Why traditional budgeting can't cope with re-forecasts
• Budgeting, Forecasting and Planning by PA Consulting Group
• Flexible budgets & performance reporting - Philip Dunn's case study series
• Focus on forecasting
• CIMA budgeting research page

Case Studies

• Life without budgets at Import Services
• Forecasting the right product mix for Diageo
• Budgeting a thing of the past for Statoil
• Excel spreadsheets in School budgeting - a cautionary tale (2001)

Budgeting with pivot tables tutorials

• Pivot tables and budgets - introductory article by David Carter
• Tutorial #2: Match the actuals to the budget
• Tutorial #4: Budgeting with Pivot Tables
• Tutorial #6: Consolidations with pivot tables - putting together a budget
• Tutorial #7: Modelling and "What If?" Analysis with Pivot Tables

Any Answers

• Do you budget at nominal code level?
• Financial modelling and budgeting software
• Financial reporting software 
• Cashflow forecasting sofware
• What software to use for budgets?
• Budgeting Software for hospitals

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