It’s Time to Reinvent the Budget Planning and Forecasting Process
Read Time: 7 minutes
Doodle Content Team
Updated: Jun 21, 2023
Table of Contents
If you’re anything like me, then the terms budgeting or forecasting will either send you directly to sleep or have you looking around eagerly for something else, anything else, to do. “What’s that? We need to plan next year’s budget? Not while there are windows that need cleaning, we don’t!”
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Believe it or not, there are people within all organizations – generally people with the word “finance” in their job titles – who enjoy budget planning and forecasting. What’s even harder to believe is that these people are in the right. While it may be a substantial quarterly or annual inconvenience for many of us, robust budgeting and forecasting provide the framework for the future of all businesses.
But what exactly do budget planning and forecasting (or BP&F as those financial types like to call it) involve? How does a budget differ from a plan or a forecast?
The old ones aren’t always the best
Excel turns 35 this year. In the three-and-a-half decades since Microsoft first launched it for the Macintosh (Windows didn’t follow until two years later), Excel has undoubtedly established and cemented its reputation as one of the all-time great business tools and software. But that’s still no excuse for still using Excel for all your budgeting, planning and forecasting.
“If it ain’t broke, don’t fix it,” you might say. Just because something isn’t defective doesn’t mean that it can’t be vastly improved upon. The primary issue with doing BP&F on spreadsheets is that it’s enormously static and reactive. While reporting, planning and forecasting annually may have cut the mustard decades ago, it simply isn’t fit for purpose in today’s VUCA business landscape. Markets, competition, trends, and sociopolitical environments now shift rapidly and unpredictably.
Modern cloud-based systems allow organizations to update and review budgets, plans and forecasts in almost-real-time, rather than being reliant on reports generated several quarters earlier when the world looked very different. For an all-too-recent example, just think about organizations today, basing their plans and strategies on data generated pre-COVID and wondering why their predictions were so far off their current revenue.
The advantages of modern BP&F software go beyond rolling forecasts, current budgets, and continuous planning; sprinkle in some other advanced solutions and watch as your entire financial management becomes more secure, flexible, and potentially even more economical.
Fail to plan and you plan to fail
Beyond speeding up the entire process, modern cloud-based BP&F solutions, teamed with other business applications, give organizations access to reams of data that can be analyzed to provide more accurate and more strategic decision-making capabilities. Processes become more collaborative and transparent, while there’s a clear audit trail should decisions or changes need revisiting.
From Kodak and Blockbuster to Toys R Us, business graveyards are haunted by great companies who were just a little too slow to realize that the current had changed direction. What steps can your company take to make sure you don’t join them?
Finally, businesses have traditionally treated budget planning and forecasting like the dark arts to be practiced by a select view behind closed doors. By increasing communication around BP&F and making reports more accessible, all stakeholders will buy into the process to a greater extent. Plus, with a clear explanation as to the importance of robust budgeting and planning to the organization’s future, financially-ignorant folk like me may even pay attention when next year’s budget needs submitting.
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