FREE online courses on Refresher on Financial Planning - Chapter 5 - Ten Best Practices in Budgeting

 

Finally, here are some best practices that can transform budgeting into a value-added activity:

 

1.      Budgeting must be linked to strategic planning since strategic decisions usually have financial implications.

2.      Make budgeting procedures part of strategic planning. For example, strategic assessments should include historical trends, competitive analysis, and other procedures that might otherwise take place within the budgeting process.

3.      The Budgeting Process should minimize the time spent collecting and gathering data and spend more time generating information for strategic decision making.

4.      Get agreement on summary budgets before you spend time preparing detail budgets.

5.      Automate the collection and consolidation of budgets within the entire organization. Users should have access to budgeting systems for easy updating.

6.      Budgets need to accept changes quickly and easily. Budgeting should be a continuous process that encourages alternative thinking.

7.      Line item detail in budgets should be based on material thresholds and not rely on a system of general ledger accounts.

8.      Budgets should give lower level managers some form of fiscal control over what is going on.

9.      Leverage your financial systems by establishing a data warehouse that can be used for both financial reporting and budgeting.

10.  Multi-National Companies should have a budgeting system that can handle inter-company elimination's and foreign currency conversions.