BUDGETING

Turning Budgeting
Pain into Budgeting

Gain
By John Orlando

It’s budget time again. Being a financial executive, you approach the annual process with excitement and a sincere belief that the process will be efficient, positive, and better than last year. Yet when members of your staff ask managers for their departmental budgets, they are met with blank stares, given excuses, or sent a budget whose form is completely unrecognizable from the template you gave the managers at the outset of the budgeting cycle.
Eventually, the dreaded consolidation effort begins, in which any number of accountants spend too many days attempting to fix the department budgets so you can roll them up into the company-wide budget. The spreadsheet is broken in so many places you barely know where to start. Just when you’ve got the data into somewhat workable form, the CEO tells you the board of directors would like to see “what if” scenarios reflecting the impact of two major business decisions being considered.
You find yourself daydreaming about the time when building a budget was actually fun.
Recognize this scenario? As a career CFO, I’ve lived through it, like you. But the scary part isn’t the aggravation that CFOs endure. The scary part is the inaccuracies resulting from this less-than-perfect budget development process that dramatically decrease confidence in the budget, according to a survey conducted by Centage and the
Institute of Management & Administration (IOMA).
The CFOs surveyed, who represented companies of all sizes in more than 20 industries, expressed a wide range of confidence levels in their ability to budget for bookings, revenues, expenses, cash flow, and collections/ disbursements. CFOs are most confident budgeting expenses. The smaller the company, the more confident they are: 58% of companies with less than $10 million in revenue are “very confident”