With so much involved in budgeting and forecasting, there is never a simple solution. Outside vendors, stakeholders, and employee performance are all factors to consider in making these processes work. And, inevitably, finding the right financial models for your organizational needs can be a challenge.
On October 20 The Jacksonville CFO Leadership Council made its debut with a panel discussion focusing on Practical Processes: Budgeting and Forecasting Best Practices. This event offered some great tips on creating, communicating, and managing budgets and forecasts.
Our Speakers Included:
Here’s What They Advised:
Budgeting and Forecasting Should Be A Collaborative Effort
Our panelists recommended distributing zero based budgets to all of your departments once a month. Not only does this method pinpoint sales volumes and production levels, but it also challenges managers to make more practical purchase choices. And, it is important to always keep a more conservative version of the budget for yourself so that you can present it to the bank when needed. Panelists also suggested management accounting, as it helps your employees to better understand the business, address standard cost variances, and measure sub standards.
Having confidence in your department managers is one of the most significant aspects of forecasting. And, as an added measure of reassurance, always assign an analyst to each department and give them budget templates so that they will have the tools to see their profitability. You must also be sure that you are setting budgets low enough to ensure bank loans, achieve sales, and meet production numbers. But, most important, keep your financial goals up-to-date with your company visions by spending significant time in meetings and working closely with management to figure out new budgeting solutions. Above all, you need to be a mediator who negotiates for resources and decides where money is allocated.
When considering projected expenses, keeping your stakeholders happy is always a priority. As you assess company performance, keep in mind that cash budgets run the risk of problems that you can’t pinpoint immediately and profit and loss budgets can give you a false sense of security if you have a large credit line. If your organization is not meeting budget and there isn’t any cash flow, you must share this information with stakeholders. Then, start to re-forecast by brainstorming with your department managers to correct monetary issues, cut expenses, and grow the top line.
Develop A Successful Budgeting System
In creating the best solution for your company needs, consider the following:
- Provide the smallest budgets to banks and lenders.
- Encourage involvement with your sales team and provide them with spreadsheets.
- Consider software to consolidate data.
- Try to find areas within your organization where there are unnecessary resources.
- Hire financial professionals in all satellite offices and enforce a central system to help interpret, store, and manage data.
- Always keep an honest and open corporate culture, utilizing analysts as needed.
For more tips and advice on budgeting and forecasting, take a look at some of our past blogs.
- KPIs and Corporate Performance Management: A NYC CFO Discussion
- No More Spreadsheets: Top 5 Reasons to STOP using Excel for Planning and Performance Management
We are so pleased that our Jacksonville chapter kickoff was such a success! And, looking ahead, we have many more stellar events planned for you in the coming months. Next on our agenda, we will be offering you our most popular program, Law School For The CFO. Combined with practical advice straight from our legal experts, topics of discussion will include employment law, de-risking commercial contracts, and social media policies. Due to the high demand for this program, we encourage you to register today.
If you would like further details on any of our additional upcoming programs and chapter updates, please contact us. As always, we welcome and encourage your questions, comments, and suggestions.