The Joy of BudgetingThere's no joy in the annual slog that constitutes traditional budgeting. The traditional approach effectively treats budgeting as a great game of wishful prognostication, poker-faced dissembling, and semi-robotic extrapolation from last year.
There is joy of a biz sort in doing budgeting in a way that is focused on organizing use of your company's to optimally support the coming year's planned activities.
And, as pointed out in a short article by Kate O'Sullivan in the December issue of CFO magazine, such an updated view of budgeting involves placing the major emphasis on planning and forward-looking analysis.
The main departure from standard budgeting practice highlighted in O'Sullivan's article is using rolling forecasts that look farther into the future than the traditional four or five quarters.
Another salient point O'Sullivan covers is the ability many companies have developed to assess the status of their business in near real-time. This is different from skewing one's decisions in an effort to keep Wall Street happy by reporting steady quarter-to-quarter earnings growth. Rather, recognizing that the business environment is generally dynamic, modern business managers are using rolling forecasts as a way of remaining flexible in order to adjust intelligently to evolving circumstances in the market.
Labels: Business acumen