By the Workcentric team
Budgeting, planning and forecasting (BP&F) – three phases of the enterprise process that determines the financial goals of an organization. When done right, it provides a good foundation to enable an organization to put their investments in the right place, reduce costs and optimize opportunities for growth. In many cases though, particularly in well-entrenched companies, the budgeting, planning and forecasting process has become a traditional practice led solely by the Finance department, resulting in plans and budgets that are not aligned to field reality. Below are some tips on how to make the BP&F process more effective:
1. Partner with key stakeholders throughout the process.
While BP&F is usually led by the Chief Financial Officer, key stakeholders need to be engaged and actively involved in the entire process. The BP&F process touches every part of the organization. It dictates all-up budget, sets targets and incentives for the sales team and allocates marketing investments. Alignment and partnership with operations, sales and marketing is a must to make BP&F more effective. In fact, the best practice is for these lines of business to own the process while finance supports.
2. Implement a rolling forecast.
In this age of constant change, sticking to a static budget created at the start of the year hinders a company’s ability to adapt to external factors. A rolling forecast gives organizations the flexibility to adjust investments and targets to reflect current conditions, allowing them to manage potential risks and exploit new opportunities.
3. Ensure data quality.
Data is now one of the most treasured assets of any organization. In fact, people call it the new electricity as we are all highly dependent on the data we have. We use it to make decisions; it is usually our basis for our budgets and forecasts. It is therefore important to ensure data integrity. Poor data quality negatively impacts the whole BP&F process. It can result in bad decision-making and wrong forecasting which can have a disastrous effect on organizations. Good data quality is also required to ably put in place analytics that can help businesses navigate through increasingly competitive business environments.
4. Implement effective technology solutions
Technology is a key enabler in enhancing the budgeting, planning and forecasting process --- and when we say technology, we mean more than just the usual spreadsheets. Dynamic tools that can help consolidate, analyze, report and model using large volumes of quality data can help create a more effective BP&F process within the organization. In addition, technology can help enterprises better predict business outcomes through predictive and even prescriptive analytics. This allows companies to prepare for potential risks and easily adapt to changes.
Workcentric offers customized and scalable analytics solutions for your budget and planning requirements. Learn more about their services here.