XLerant Blog

I like your beginning; however, it is too simplistic or text bookish, soft and no meat. “Rolling Forecast, or Zero Based Budgeting, or Value Planning, or Activity Based Budgeting and other planning tools” in for profit businesses are ways of, at a minimum justifying the status quo, additional staffing, or increased spending for gains in productivity. The meat of the budget process is in the Sales and Revenue plan. All else have little justification without sound, achievable marketing plan. 
 
• Improve the reliability of our financial projections  
 
We finance professionals are detailed oriented and spend much time assessing the reliability of our financial projections; however, regardless of the financial planning tools used, it all boils down to “sources of information” and the downward pressures they are under to return objectives in line with senior management targets. Whom do you look to for revenue and sales numbers? How financial professionals do evaluate the creditability of those numbers? What measuring stick is the best tool for validating the “do-ability”, or achievability of budgeted sales and revenues? 
 
As I indicated in other writings on similar subjects, the best valuation tools are dependent on the industry. Hard goods manufacturing, professional based services like law firms, accounting and medical practices, utilities, etc. have their own financial planning methodologies and validation processes that shared one thing that is key to accuracy – Product Market awareness. This not only includes awareness of one’s own products, is inclusive of the competition and new entries. 
 
• Build a greater sense of ownership and accountability of the numbers 
 
Do you push back to the owners of the numbers, and become personally involved with how derived so that your knowledge and understanding mirrors the “real owners”, those that will be tasked with achieving the desired results? Has “the budget game” changed from Sales low-balling and finance pushing for more – budget versus stretch objectives? Alternatively, senior management so removed, they arbitrarily picking growth rates that are unobtainable and Sales rejects ownership? How often has management inject disclaimers removing themselves from ownership and accountability– those are Finance’s or Accounting’s numbers; I never agreed to those targets. Who is the arbitrator between what Sales is will to commit, and what senior management will accept? 
 
• In your hierarchy of common objectives - Improve the decisions made in the process to maximize the benefit of planning to the organization moves from last place to nearer the top in degree of importance. Poor or inadequate decisions processes lead to poor results and disassociation of ownership and commitment regards of the ownership and accountability imposed by Finance /Accounting.