Tag Archives: Budgeting and Planning
“Calculating one budget scenario is already an extensive and complex exercise, considering the re-calculation of cost and profit centres, legal entities, business divisions, and other parties involved. Therefore, calculating scenario-based budgets to return a landing range of profitability will require powerful ERP and BI tools to process the quantity of data.”
“While a rigorous budget process shines a light on new initiatives and long-term goals, while also providing the guardrails for the coming year, sometimes facts on the ground change and you need to understand that and respond accordingly. If the changes are material, that response should include an accurate and sufficiently detailed forecast. Running a business is challenging. Attempting it with limited visibility will mute its successes and may even hasten its demise.”
“What would a mild, moderate, and severe downturn do to your business as a whole and to each part? Get specific. Where are you most vulnerable to inflation? A drop in demand? A supply-chain snarl? What actions would you take in each case? Who should take them?”
““We’re increasingly seeing sort of a pivot in finance, [where we’re] moving away from finance being the transactional record keeper to finance becoming more of the financial insights department,” Horvat said in an interview. “So what we’re seeing is CFOs leveraging new data and analytics techniques…to identify abilities to save money within the organization.””
“Despite these uncertainties, CFOs and other C-suite executives, who strive to stay ahead of price changes and supply shocks in global energy and commodities markets, can find insights and analyses for their planning and budgeting needs. Four sets of indicators to watch below can help executives identify vulnerabilities and find alternatives, possibly giving organizations an added layer of flexibility against sudden market shifts.”
“But “Excel is not a good tool when you’re seeking to coordinate the operation of a multinational company,” said Bruce Lynn, managing partner of The Financial Executives Consulting Group (FECG). “I have my spreadsheet, you have your spreadsheet, everybody else has their spreadsheets, and none of them talk to each other.”
Still, many finance departments are reluctant to let go of Excel even when more powerful purpose-built applications are available.”
“But there’s a paradox, as Adrian outlined. Budgeting takes place within the context set by the strategic plan. The point at which the budget is set is the same point at which executive and shareholder expectations are put in place. Now circumstances change. And in a flexible planning environment so too does the strategic plan. What happens to the budget?”
“What is new in ZBB?
- ZBB is not a cost-cutting exercise. It is part of every line of the planning process.
- It is also a method to identify key drivers, so it is linked to driver-based planning.
- It is a rethinking of the traditional budgeting process.
- It is improving Business Partnering due to collaborations and the use of modern technology.”
“Rising prices for months have disrupted CFO budgeting, risk management, forecasting and pricing, and show no signs of easing.”