As part of a series of articles on planning, budgeting and forecasting, Tom Herbert speaks to finance directors and budgeting experts to get their tips for how to make next year’s budget better.
The traditional view of the budget was that it was done purely by the finance department from the corner office, but over time companies realised they had to get input from those on the ground. This shift, combined with cost constraints and increased responsibilities for almost all budget stakeholders, has altered the budget considerably.
Participants in this exercise may have changed and expanded, but the processes behind it often haven’t. Every year finance directors sit with confused cost centre managers poring over spreadsheets that bear little relation to the figures they deal with on a day-to-day basis. The process is frustrating and time-consuming for both parties.
To explore modern budgeting, AccountingWEB spoke to a range of FDs and budgeting experts for their take on how to improve this most fickle of processes.
1) Keep it simple
Regular AccountingWEB contributor and manufacturing finance director tom123 urged fellow budgeters not to try and be too clever. “It’s no good for users - they don’t know what they’re looking at,” he told AccountingWEB.
“The closer it is to the material the better. If they have a quarterly expense for, say, renting a machine, then most budget holders will get used to the idea that it will appear over three months in each month. But if you start trying to do more technical things users don’t see the point of the report and it ceases to have any function at all.
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