BMA Budgeting and Forecasting - A New View

For most organisations, budgeting and forecasting are vital, but time-consuming processes that involve most of the management team. The annual budgeting exercise is seen as important to satisfy the Board and stakeholders that the organisation is managed in a fiscally responsible way. This view results in the budget presenting primarily financial targets and measures. It does not include targets and measures that reflect the means by which managers can control financial outcomes.

Often, the budget is developed in isolation from strategic planning and is linked in a tenuous way to the organisation's strategic objectives. Thus, the performance of managers and business units is often measured by variances from the annual budget - rather than more specific and manageable targets that are developed to reflect progress toward achieving strategic objectives. This leaves very little flexibility for managers - particularly, in making decisions on the most effective allocation of resources.

This also means that management reporting tends to be past-oriented - showing what happened relative to budget. It does not include future-oriented measures that provide early-warning of problems and opportunities. Such early-warning measures allow time for managers to behave proactively to exploit opportunities and prevent problems from emerging. Managers can focus on issues before they become problems - moving from "what happened?" to "why?" and "what can we do now?".

"The past is important and can't be changed. The future is more important and can be changed."

Finally, the traditional annual budget is often out-of-date by the time it is finalised - particularly, in these fast-moving times. This means that variances against the budget are a very misleading measure of performance and can contribute to wrong decisions. Continual review of strategy and forecasting, with review of performance is critical.

Accordingly, BMA is often asked by its clients to review associated processes to make these more supportive of proactive management, more focussed on achieving strategic objectives and less expensive and time-consuming.

Advantages of the BMA Process

The advantages are:

• Integrates budgeting, forecasting and reporting with strategic plan
• Focuses on achieving targets
• Action-oriented
• Review process is focussed on progress toward strategic objectives
• Managers have authority to vary resource allocation to achieve targets
• Managers are accountable through "buy-in" to targets
• Early warning of changes ensures rapid response
• Simpler and less stressful than annual budgeting

BMA Budgeting, Forecasting and Reporting Soultions

The BMA Group can also provide practical design and implementation of integrated budgeting, forecasting and management reporting solutions that fit your organisation's needs exactly.

We specialise in designing, developing and implementing tailored, integrated budgeting, forecasting and management reporting systems that are both powerful and pragmatic. This results in much better enterprise data management and reporting. Typically these projects only take 1 to 3 months to complete. And, we use the business intelligence software best suited to your applications and resources.

Benefits of BMAs budgeting applications are:

• Greater control over the budgeting process due to built-in facilities, process reporting and alerts.
• Much shorter budgeting and planning cycles.
• Immediate top-level results for any revision of the plan or budget.
• "Top down" budgeting feasible due to built-in facilities and immediate delivery of results.
• Much less resource required to prepare, plan, manage and effect the planning process - even when plan contributors are widely dispersed. Less load on Finance staff.
• More time available for thinking about the plan because less needed to devote to the process.
• Opportunity to use performance based budgeting or zero based budgeting

We partner with our clients to select the best budgeting and forecasting software. Also, we ensure efficient workflow and transfer of knowledge during a project. Our expertise and experience allow us to add value and to act as catalysts for process improvement.

To enquire about assistance with your budgeting, forecasting or reporting please fill in our enquiry form.