Budget vs Forecast

 

1️⃣ Align Strategy and Finance:

- Ensure the 5-year financial plan integrates with the business vision and strategic objectives

- Bring together leaders from different departments to ensure financial plans support the overall business goals

- Develop clear financial indicators that track the company’s progress towards its strategic goals, making sure everyone understands these metrics

2️⃣ Detail Annual Budgets:

- Translate the long-term strategy into actionable annual budgets for the current operating cycle

- Work closely with department heads to create budgets that meet both their operational needs and align with the company’s strategic objectives

- Set up regular reviews to adjust scenario planners and forecasts based on new information or changes in the business environment

3️⃣ Create a Rolling Forecast:

- Continuously update the budget with actual results to adjust and improve future financial performance projections

- Use the latest data to update financial forecasts at every month end close to ensure they remain accurate and relevant

- Plan routine check-ins throughout the year to reassess forecasts and make necessary adjustments based on performance

4️⃣ Manage Variance:

- Conduct regular variance analysis to manage discrepancies and adjust strategies as needed

- Regularly examine any discrepancies between expected and actual financial results to understand the reasons behind them

- Use insights from the variance analysis to quickly adjust plans or strategies to stay on track

5️⃣ Scenario Planning:

- Incorporate multiple scenario analyses to enhance flexibility and preparedness for different future states

- Regularly test financial plans against different potential future scenarios to identify opportunities and vulnerabilities, and strengthen resilience

- Develop and maintain ready-to-execute plans for various scenarios to manage risks effectively and capitalize on opportunities swiftly

https://tinyurl.com/ycukk6ck