Planning and Budgeting
Traditional Planning, budgeting and forecasting are going out of fashion.
Whatever people call them, it is important to have quantified targets for a period of time so that people know what they are supposed to be aiming for and have a coherent picture of the direction of the company.
The qualified targets should be linked to the strategic plan and provide direction. The frequency with which these targets should be updated will depend on the degree of change within the organisation or in the markets. Cost targets, for example, may need to be amended to reflect inflationary changes or changes in the volume of business. Income targets may need to reflect changes in interest rates, product mix, pricing changes and/or changes in the level of business activity.
Most financial services organisations will review their budgets every three months and may decide to revise them or to produce forecasts of the expected results in the new economic environment.
We can help to review and update your current budgeting process to ensure that the budgets are more than simply arcane financial plans.
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Review the Budgeting Process
In a rapidly changing world the tools used to plan the future and manage performance need to be flexible too.
Budgets are Dead, Long live Budgets
Many people are decrying the traditional methods of budgeting and suggesting something new. Yet what is traditional budgeting and how do these new techniques differ?
Outcome Based Budgeting
Traditional budgets measure inputs, agreeing how much resource will be allocated to each cost centre. Yet people are more interested in the outputs achieved.
Budgets as part of MI
Budgets used to be a key management tool but as the importance of non-financial information increases they become a smaller part of MI
Managing the Future
The need for focused management information based on a consistent base of cost effective, timely data is becoming one of the keys to competitive advantage.
Case Study - Responsibility Reporting
We have worked with the UK division of an International Bank to manage the design and implementation of an automated Management Responsibility Reporting System
Static or Flexible Budgets
Flexibility helps internal management but makes reporting harder. Which should an organisation do?
Alternative Budgeting Methods
There are basically 4 methods of budgeting; traditional, zero-based, priority-based, and activity-based although most companies use a combination of methods
Using ABC to reduce costs
Activity-based Costing focuses on activities not responsibilities. It depersonalises the cost review and enables management to evaluate the activities performed
Profit Improvement Programme
In a profit improvement training programme we aim to introduce many of the profit improvement techniques and review their applicability in your organisation.
Strategic Cost Analysis
Strategic Cost Analysis helps companies identify, analyse, and use strategically important resources for continuing success and growth of the business