We used to be able to simply look at last year’s actuals, apply growth trends and the seasonality to build budgets and forecast going forward but we just can’t do that anymore! It’s never been more important to have the skills to be able to build robust, flexible and dynamic budget models to accurately predict budgets and forecasts for future periods.
I am very much looking forward to my new LIVE and ONLINE sessions on one of my favourite topics – budgeting and forecasting! During the many years I’ve been working as a finance & analytical consultant, I’ve built, overseen, implemented and reported against scores of budgets and forecasts across a multitude of industries, but forecasting has never been as much of a challenge as it is at the moment.
On the course, I’ll be discussing some ways you can harness the standard Excel tools that you already have to build easily updatable budget and forecast models. Many of the examples I’ll use in this course are drawn from my real-life experience with clients. We’ll be doing plenty of hand-on exercises as well as discussing the theory and concepts, so make sure you’ve got your camera and microphones switched ON and your preferred version of Excel installed. This is NOT one of those “sit back and listen” type webinar events! You will be following along with each step to build and practice each formula, tool and technique and I’ll be providing you with lots of templates and financial models that you can take away and adapt to use in your own organisation.
What are the current top challenges faced by budgeting and finance managers today?
Being responsible for the budgeting and forecasting process in your organisation is no easy job and here are some of the reasons why;
- Businesses have always changed rapidly, but the amount of disruption we’ve seen in recent months is unprecedented. By the time the budget is in place, the company’s products, products and even staff have changed entirely. Even under normal circumstances, the assumptions used to create a budget are often obsolete after a short time, so it’s critical for organisations to have good tools and processes in place to cope with this volatile environment.
- Deciding which software to use for the budgeting and forecasting process is a huge decision! There are loads of tools to choose from, (including a basic Excel solution) and it often depends on how it integrates with the systems you’re already using, and how easy it will be to manage, and report from.
- Budgeting suffers from a bit of an image problem, and gaining buy-in from those who need to review and enter their inputs to the budget cycle can be difficult. Budgets are often perceived as a negative evaluation tool, so having clear guidelines on how the actuals are measured against the budget is important so that the budget is useful and meaningful – not just a box-ticking exercise.
- Putting together a budget is incredibly time-consuming and if you’re not careful, it can drain resources without adding much value. We’ll talk about ways to make sure that the budgeting process is a good use of your time and a value-add activity, rather than a cost.
- There’s no point in spending the time and resources to put together budget or forecast unless you’re able to report against it! Variance analysis is one of the most useful exercises for cost control and understanding revenue, but in order for it to provide value, it needs to be performed regularly and accurately.
In this training, we’ll explore some ways of addressing these challenges to ensure that the budgeting and forecasting process is a useful activity, adding value to the organisation and a positive experience for all involved.
Top tips for Managing your budget (that don’t involve Excel)
- Budgets are often used to set staff KPIs which in turn leads to bonuses if they are achieved or surpassed. It’s no wonder that budgets are so often low-balled when it comes to sales and high-balled for expenses. With these kinds of gaming in play, it’s very difficult to get a realistic number in the budget. It’s true, however, that what gets measured gets done, so rewarding staff for accurate projections, rather than “beating the budget” can be far more constructive and lead to better outcomes.
- Having a clear link between the strategic plan and the day to day cash flow is not always achievable but certainly something to aspire to. A manager who knows exactly how each line item of expenditure in their area contributes to the five-year forecast of where the company is going, will be able to run their department with confidence.
- Make sure that when you’ve completed the budget, it doesn’t just sit on the shelf gathering dust. A budget is a useful tool which should be constantly referred to and measured against. Performing variance analysis every month so that you understand exactly why the budget was exceeded or not met will benefit the company overall and help with setting the budget more accurately in future.
- For many of my clients, the budgeting process still takes up a large part of the year for the finance function. Building a fully detailed budget is required, but the value gain is often disproportional to the amount of effort involved in preparing the budget. If you put in the effort into a more flexible and fluid forecasting process instead of a static budget will save a huge amount of time in the long run.