How to Avoid Bad Budgeting

by | Feb 7, 2023 | Budgeting, Finance and Banking, General BI and Data Management

-PARIS is proud to be featuring FP&A expert specializing in Manufacturing, Benjamin Wann

-by Benjamin Wann, FP&A expert and writer at



This article is an in-depth review of the end-to-end budgeting process, covering each of the steps required to prepare, build, and set a corporate budget. The article explains each critical budgeting step and also uncovers the common pitfalls and remedies along the way, with an emphasis on utilizing modern tools, technologies, and methodologies to clearly understand which factors lead to bad budgeting and what behaviors, processes, and tactics are required to produce a good budget. After reading this article, you are your team will be better positioned to understand what you must get right early on to succeed in the long term and maximize your impact. 

Estimated Reading Time: 28 mins; 5,732 words


1. The Pains of Bad Budgeting

Budgeting for businesses is absurd, and everyone knows it.

The amount of time budgeting takes, forcing executives, directors, and managers into endless meetings and tense negotiations is mind-numbing. Budgeting incites managers to embellish results, set low expectations for targets, and punish them for speaking the truth. It transforms corporate decisions into complex gamesmanship.

Bad budgeting pits coworkers against each other, sowing seeds of mistrust and animosity. Additionally, it distorts incentives, encouraging people to take actions detrimental to their companies’ best interests.

Bad budgeting can lead to negative long-term financial impacts and difficulties in reaching organizational goals and objectives. Without good budgeting practices, businesses may be unable to effectively allocate resources where they are most needed and not know the difference until it is too late.

    1. First, running blind without a cohesive plan tying strategy to day-to-day operations keeps the business focused solely on keeping the lights on rather than achieving its long-term objectives.
    2. Second, using the wrong numbers and unknowns for decision-making can lead to bad investments and inaccurate forecasts.
    3. Lastly, it can take too much time to produce too little accurate data, thus wasting valuable resources that could otherwise be used for more productive tasks.

For these primary reasons, bad budgeting must be recognized and avoided to maintain proper financial health within an organization.

This article will explain what bad budgeting is, how it impacts your business, and also share best practices on good budgeting. Let’s take a deeper dive to understand each point a little better.

Running blind. Business doesn’t have a cohesive plan tying strategy to day-to-day operations (keeping the lights on is the focus)

Done right and done well, budgeting is a tool and process that serves as the guiding light for an organization. It’s the roadmap to direct them where to spend time and resources, with budget targets to help them keep score and stay on track. While budgets aren’t perfect, they are helpful.

Bad budgeting, on the contrary, can seriously impact businesses. Without a cohesive plan tying strategy and business goals to the necessary day-to-day activities, companies cannot run on autopilot and find themselves unable to take full advantage of growth opportunities or adequately anticipate challenges that might arise. Sort of like a blind man feeling their way through the dark, but with bear traps every few feet.

Bad budgeting can lead to stagnation for employees and customers alike, quickly turning enthusiasm into frustration and leaving long-term success in doubt. As leaders have to choose between just continuing as they are or trying to make sense of an unworkable budget, the default is to focus on the short term and ignore the long term.

Bad budgeting uses the wrong numbers and known unknowns for decision-making

Poor budgeting practices can have devastating impacts on businesses.

When the correct numbers and known unknowns are not considered, decisions are made without understanding the complete picture. This creates a poorly calculated budget, leading to serious budgetary missteps, resulting in unnecessary costs and operational inefficiencies.

Bad budgeting, where potential risks cannot be anticipated, can create problems down the road that are difficult to predict and rectify. Often, calculations and scenarios we don’t know yet – the so-called known unknowns – are the ones that come back to bite us since these unexpected situations rarely happen when and how we expect them to. And, of course, there is no alternative plan of action in place for deviations off course.

Poor budgeting can also affect a business’s ability to get financing from investors, as an inaccurate forecast of the company’s finances leaves little assurance for possible lenders. Hard data, not educated guesses or intuition, form the foundation of an accurate budget.

Bad Budgeting takes too long to produce too little

Many finance professionals know and keenly understand the pain of spending weeks and months to produce a budget that isn’t much of anything. Days are spent full of meetings, performing Excel modeling, and reviewing system inputs and outputs… But when you step back, the budget isn’t that useful.

Often, with bad budgeting, the output is outdated on arrival and has been so twisted and worked over it doesn’t mean much to anyone, certainly not decision-makers.

Perhaps the most damning downside to bad budgeting is that it wastes precious time and resources. Rather than making the most of a finance team’s skills and abilities, bad budgeting leads to inefficient use of nonrenewable resources better used elsewhere to support the business.

2. Things You Gotta Do to Avoid Bad Budgeting

If we were to get philosophical for a moment, bad budgeting is what happens when you lack mindfulness. If you are reacting to what is immediate and urgent, driven through intuition, you’ll miss the big picture.

Good budgeting, on the other hand, is the product of mindfulness, robust processes, and experience. Finance and FP&A teams who have learned to budget well know there is a lot to do and learn well before the budgeting process even begins.

Good corporate budgeting is a bit like that famous iceberg metaphor, where only a small portion is visible to most, while most of what comprises it is out of sight. Good budgeting requires discipline and preparation while understanding your company’s objectives and clearly creating realistic goals.

Planning ahead or addressing the things “you gotta do” can help you identify potential risks and, thus, reduce the amount of process inefficiency and ineffectiveness. In the FP&A world, the two most important things you “gotta do” and do right are:

      1. Review Existing Capabilities and Perform Needs Analysis
      2. Standardize & Optimize using the Right Budgeting Software Solution


Review Existing Capabilities and Perform Needs Analysis

When it comes to corporate budgeting, taking a proactive approach to preventing bad budgeting is critical. Good budgeting involves analyzing the company’s existing capabilities and investigating what needs to be provided in terms of resources and expenditure.

Thus, taking the time now to review existing budgeting systems, tools, and skill capabilities and analyze needs can save endless time and money later on. To complete this step, an organization needs to spend time cataloging and understanding which resources are currently available compared to which are required.

Once a complete list of needs and current capabilities is generated, the finance team will need to rank and prioritize where investment is needed in the short, intermediate, and long term. From there, the FP&A function should discuss the list with executives and explain what will and will not happen if the capabilities are in-house to meet the organization’s budgeting and planning needs.

Standardize & Optimize Using the Right Budgeting Software Solution

Ask any finance team if they have a budgeting solution, and they will tell you, “Sure! It’s right over there- Excel 95 is a thing of beauty!”

I joke, but only partly.

While every organization has a system, it may not (probably is not) be the right system to handle the budget requirements and business needs. Understanding the needs of an organization and taking a holistic look at the tools and solutions available today is a much-needed and eye-opening exercise.

Achieving the desired financial outcome for budget requires getting the right tools and ensuring stakeholders’ needs and wants are heard and understood. To set yourself up for success, it’s essential to implement a budgeting software solution that helps standardize the process and allows you to optimize your corporate budgeting in real-time.

For example, automated expense categorization and employee tracking ensure accurate data input while avoiding manual errors during reconciliations. Additionally, when integrating these solutions with an existing CRM or accounting platform, you can keep all financial data on one unified platform while getting detailed visibility into the progress of your business.

Ultimately, having reliable budgeting software provides reliability, accuracy, and superior control over your financials – the right tools will make all the difference in managing successful budgets.

If Bill Gates was still CEO of Microsoft the last time you assessed the budgeting tools at hand, perhaps it’s time to take another look at the marketplace.

Hint: today, you can get much more powerful tools for much more affordable rates than just a few years past.

3. Step Back To Avoid Bad Budgeting

When FP&A folks hear the word “budgeting cycle,” they line up like swimmers on the blocks- waiting for the sharp release of the gun to send them flying toward the end goal.

They want to jump in, head first, and just get the process started- so it can be over with already.

However, focusing on the tasks rather than the end goal and the outcomes and how they will be supported by the people, systems, and processes, is a fool-hardy route.

Before jumping into tasks, FP&A teams should and must discuss the budget as a road map for a company to use to plan, review, and update its revenue and expense streams to achieve financial stability.

Not only should the FP&A team review the outcomes they must work toward, but they should also review and discuss what has worked previously, what must work better this year, and what the drivers will be to ensure what needs to be done, is done right, and done on time.

A budget process should include a kick-off process, where the timeline, involvement, and outcomes will be discussed. In addition, the budget process preparation should include steps to ensure the budget will have visibility into the Key KPIs and the critical business drivers identified and considered throughout the process.

Annual Kick-Off Process To Communicate Plan And Process To Stakeholders

It’s always important to step back at the beginning of each year and evaluate one’s budgeting process. Reassessing goals, deadlines and processes can be crucial for a successful budget strategy. Then, an effective way to communicate these goals from the start is by conducting an annual kick-off meeting with all stakeholders involved.

A budget kick-off process to communicate plans and processes to stakeholders ensures everyone is on the same page concerning budget decisions, helping limit roadblocks or disagreements. By taking a few moments to plan in advance, it’s almost assured that any budget plan will have better long-term success doing this.

Adopt Analytics To Improve Visibility By Identifying Key Performance Indicators (KPIs)

Corporate budgeting processes are complex; if they are to be successful, then leveraging analytics can provide organizations with improved performance and visibility. Analytics allows organizations to tap into large sets of data to develop meaningful insights, which, in turn, will help improve budget performance and increase clarity over how resources are being used.

An effective way for businesses to use analytics is to identify key performance indicators (KPIs) that could measure the success of their strategic initiatives. This allows them to compare their budgetary objectives on an ongoing basis and make necessary adjustments accordingly.

With analytics providing a streamlined approach for organizations to analyze financial scenarios, it enables them to more accurately identify critical KPIs and make more informed decisions that ultimately improve budget performance and visibility.

Strong KPIs supported by robust data are essential to ensure the future success of the budgeting processes. They enable you to understand what drives performance, contributes to organizational growth, and where you’ve found success in the past. The right metrics in the right place help organization make timely adjustments along the way based on market and industry conditions.

Prioritize Business Drivers

Before any tasks are initiated on the budget, the FP&A function and business stakeholders must identify the critical business drivers central to business profitability and meeting various goals.

Your corporate budgeting process should be built around the answers to these questions using driver-based and predictive budgeting. Doing this can assist you in concentrating your budgeting on the most critical issues, allowing you to keep an eye on the factors influencing your organization’s success.

Each company has specific internal and external driving forces. The success of your business can be influenced by various factors at any given time of year, including traffic, demand, interest rates, and occasionally even the weather.

Ask: What factors are affecting your company? How will your budget help you achieve your long-term objectives?

These crucial drivers are taken into account by driver-based budgeting (DBB), which integrates the drivers most likely to impact performance into the budgeting process.

By using a rules-based approach to focus your budget around strategic objectives and tell a story about what and how it contributes to your organization’s performance, DBB gives you long-term visibility into how those drivers affect your company’s strategy and goals.

By using business drivers to guide your budgeting process, you can allocate your resources more effectively for a higher chance of success if you know exactly which factors are most responsible for expanding your business. Additionally, it will be simpler to model scenarios to understand how they might affect performance in the future, allowing you to focus your budget precisely on where it will yield the best results.


4. Analyze/Adjust to Avoid Bad Budgeting


A popular quote attributed to Einstein goes, “Insanity is doing the same thing repeatedly and expecting different results.” In budgeting and FP&A, this quote is meaningful in helping us to remember that we must be prepared to analyze what and how we do budgeting and to adjust when necessary.

Corporate budgeting is an essential and multifaceted financial process that can make or break a company if not managed properly. To avoid bad corporate budgeting, businesses must take specific steps to analyze their current budgeting processes and develop solutions to any identified issues. Adjustments should incorporate short-term fixes and longer-term plans to keep the budget aligned with the organization’s goals.

The success of the budget depends on having reliable data and resources paired with an understanding of business conditions, allowing for periodic adjustments as needed. Good analysis, communication, and oversight can help corporations create better budgets that benefit all stakeholders.

As facts, drivers, and other circumstances dictate, the FP&A team and the systems that support them must be able to pivot, readjust, and drive onward.

Assess Current Year-to-Date Performance

Proper corporate budgeting begins with assessing current year-to-date performance. Companies can then determine areas where they are underperforming and adjust the current budget structure to help close the gap between projected and actual results.

By keeping track of the possible pitfalls in their current budget, organizations will be better equipped to adjust accordingly and avoid bad budgeting in the future. Understanding current performance and the explanations behind the results is key to building a strong foundation.

If the YTD performance is not understood fully, budgeting off this information as a starting point will lead to misunderstood and inaccurate budget outcomes.

Update Your 18-Month Forecast

One way to avoid bad corporate budgeting is to keep an up-to-date 18-month forecast. Knowing current market trends and potential upcoming obstacles will allow companies to adjust spending accordingly and ensure stable growth.

To get an accurate and realistic picture of future events, businesses should analyze their current financial situation and projections, track competitor activities and measure customer feedback. By doing so, a business can make the necessary adjustments to its budgeting strategies to help them stay ahead financially while weathering any economic and competitive changes.

5. Make Budgeting and Forecasting an Agile, Ongoing Process to Ensure Good Budgeting

As your sales unexpectedly increase next year, what happens with the rest of your budget model? Do cost targets also proportionately increase where appropriate? Does the model scale up to recommend the headcount required in each department to support this growth?

If the budget doesn’t scale, using an agile and flexible framework, you could be in trouble. Instead of supporting that incredible sales growth, the focus could instead be on keeping down rising costs (required to support sales) or grappling to understand and decline the surge of new headcount requests.

For this reason, it’s absolutely critical to make budgeting and forecasting an agile, ongoing process.

A company’s budgeting procedure should ideally start with a clear understanding of its strategy and objectives. Without that transparency, ensuring that your corporate budget covers your organization’s needs and has adequate funding to support programs, people, and cross-departmental initiatives can be challenging. The budget alignment then becomes essential.

Finally, having some flexibility built into your budgeting process will allow you to make changes as needed by the market or your company, ensuring you always have the necessary resources. Budgets have historically been rigid, but finance teams today recognize that adjustments are occasionally necessary.



Establish A Five-Year Rolling Forecast

Part of ensuring you build a good budgeting process that is agile and flexible is the use of rolling forecasts.

Rolling forecasts allow you to remain flexible to new trends and requirements while continuing to advance the planning horizon by allowing you to project future needs better while maintaining visibility into recent performance. Reviewing monthly results compared to the budget, prior year actuals, and a rolling forecast helps provide several perspectives on performance and goal achievement.

Better yet, budgets (perhaps fairly) are criticized as backward-looking. While this is the case in that they are the best estimate at a point in time, they are still valuable for organizations to achieve their objectives.

Rolling forecasts are especially helpful for fast-growing companies that must make medium- to long-term commitments like hiring choices, inventory purchases, or stay current with a rapidly evolving sector of the economy.

Rolling forecasts can also be used with more static budgets, combining aspects of both to make rolling forecasts an addition to your annual budgeting process. They may be implemented as a systematic review process to keep up with current performance and shifting market conditions. Alternatively, they may be applied only to certain areas, such as revenue or cash planning, with a more conventional approach used in other areas.

Take into account these six best practices to ensure the success of your rolling forecasts:

    1. Constantly keep your company’s overall goals front and center. Your rolling forecast should be in line with your company’s overall strategy, and you should update it as your plans and goals change.
    2. Pick a timetable that works for your company. Set your timeframe following the speed of the industry you operate in and the rate at which your company evaluates progress.
    3. Choose the level of detail you want to achieve. Concentrate your analysis on the factors most affecting your strategic goals and ongoing performance.
    4. Select the appropriate technology to make your forecasts easier. By selecting a tool, ensure your forecast has the inputs it requires to be valid across your business strategy and KPIs.
    5. Include the most up-to-date data. Utilize the areas where your data is clean, then use forecasting to increase accountability and transparency for progressively cleaner data.
    6. Measure each step of the way to monitor execution. Track execution using dashboards and visualizations to see how your forecast compares to actual performance.

Remember that no matter how you go about it, your budgeting process and your company’s ongoing success depend on keeping it in line with your organization’s culture, strategy, and future goals. Ensuring your budget keeps up with ongoing performance is equally as crucial as staying on top of your budgeting requirements. That is where rolling forecasting can be most helpful.

A rolling forecast allows you to look 13 weeks, 12 months, four quarters, or 18 months into the future at any time, depending on what makes the most sense for the business process or planning outcome to which it is being applied.

Re-Examine Your Long-Range Plan (5-10 years)

The hidden value in the budget process is setting aside time to truly think strategically. By giving yourself and the FP&A function time to step away from the day-to-day rush, they can work with other leaders across the organization to plan for where the organization must be positioned in the next 5-10 years.

And importantly, the budgeting process is where the organization identifies what drivers and other factors will enable that strategy to become a reality instead of a fantasy.

Re-examining your long-range plan over the next 5-10 years is key to ensuring the current year’s budget makes the appropriate incremental steps toward achieving the longer-term vision. The budget should push the organization to grow but also be realistic. Mapping out what needs to happen and by when ensures the budget makes sense and is achievable in all contexts.

Revisit Your Strategy and Budget Each Quarter

Perhaps one of the biggest mistakes organizations makes each year is putting all sorts of time and energy into reviewing and setting the current year strategy… and then forgetting about it… allowing it to gather dust on some shelf or some shared drive.

Adding in a cadence to review, share, and discuss the strategy the budget is based on is critical to ensuring all stakeholders know and understand not just the what but the why. Reviewing the strategy monthly would be a bit overkill, but quarterly is just right.

Plus, other significant reporting and analysis milestones occur quarterly. Adding in a strategy review and analysis toward achieving that strategy ensures the entire organization is pointed in the right direction, short and long-term.

6. Update Your Model Based On Fresh Data to Ensure Good Budgeting


As the FP&A team builds the budget, forecast, and analyzes actual results, a critical step in all these processes is ensuring the systemization of incorporating new data into the model.

What this doesn’t mean is exporting a CSV file from the ERP system and copy/pasting it into an Excel workbook that is intended to manage all of these processes.

By previously investigating and investing in the right tool for the job, your system seamlessly brings new data into the model for analysis. By removing human intervention, data quality is ensured, and critical time is saved for analysis, not data prep.


7. Optimal Requirements To Put Into Practice to Ensure Good Budgeting


Budgeting can be complicated, but the right approach can provide insight and clarity to help your business reach its objectives.

To ensure good budgeting practices are in place, it is crucial to follow specific guidelines such as building the budget incrementally throughout the year, incorporating scenario planning, and including non-financial data that matter.

Building the budget incrementally throughout the year involves regularly developing projections and including any changes or new developments as they occur. This incremental approach allows for flexibility in the budgeting process and provides better insight into both short-term plans and long-term objectives.

Incorporating scenario planning is crucial for navigating uncertainty and changes that may occur during the fiscal year. By creating different models based on potential outcomes, companies can better anticipate their needs and develop strategies for dealing with unexpected events. Having a plan B in place means that any changes or unexpected events can be navigated with greater efficiency and confidence.

Finally, including non-financial data is essential for making informed decisions when allocating resources. Non-financial metrics such as customer satisfaction and employee engagement should not be overlooked as they provide valuable insights into the business’s health, which can then inform budgeting decisions.

By following these guidelines, companies can implement good budgeting practices and use their resources better. This will help them reach their objectives and maximize returns on investment.

Build The Budget Incrementally Throughout The Year

The annual budget process is a long and arduous journey that requires skill and dedication.

FP&A professionals are typically familiar with the annual restriction of planning vacations anytime between July-October. This is the crunch time, where on top of normal responsibilities, they must take on the additional budget burden. No one looks forward to this dreaded season.

However, there is a better way to go about budgeting- by building it incrementally and regularly.

By taking a step-by-step approach, FP&A teams can incrementally create plans to help their organization reach its goals and objectives while spreading the work over a more regular cadence, ensuring the process is more robust, more accurate, and less stressful.

By starting the process early in the year, they can ensure that their plans are realistic and minimize potential risks. Doing so allows them to make timely changes, ensuring that their organizations remain on course all year round.

Incorporate Scenario Planning & what-if scenarios

The budgeting process is frequently a lengthy and challenging exercise to forge a shared vision of the future that will direct a company’s investments and activities for the upcoming year. When the budget is completed, one version is typically produced- Sales, costs, and ROI will be X.

While many management teams make informal predictions about how their companies will develop, very few actively discuss various scenarios or carry out the specific short- and long-term financial analyses that would give such a debate meaning.

However, using modern budgeting and planning tools, many businesses are now adopting more than one budget at the end of the process. These alternative budgets provide alternative financial statements and business plans based on realistic future scenarios.

Businesses can adapt and stay on track when they identify which events may occur. For example, suppose the accessibility of short-term financing declines, the insolvency risk of significant clients or suppliers increases, or a decline in product market share is anticipated. In that case, the organization can anticipate and switch from the primary scenario to an alternative.

When risk levels exceed predetermined thresholds, the predetermined backup plans would be implemented immediately by the entire executive team and communicated throughout the organization. By building several realistic business scenarios/options throughout the budget cycle, organizations can be prepared for what comes next.

Include Non-Financial Metrics That Matter

As your FP&A team builds the budget, it is also wise to track and include non-financial metrics that matter in the model. While businesses are about investing money to achieve a profit, non-financial metrics are crucial to measuring progress and feeling out the market.

Non-financial metrics can be just as crucial to your organization’s and your budget’s success as financial ones. Keep non-financial drivers and KPIs in sight because they are crucial for keeping your budgeting process on track.

Non-financial metrics can help you measure and track your budgeting process’s progress in areas that may not be directly related to financial performance and include:

    • customer satisfaction
    • employee morale
    • operational efficiency
    • product or service quality
    • other vital indicators for success

Taking these non-financial metrics into account when making decisions can help create a more balanced approach toward budgeting and serve as leading or lagging indicators. For example, if product quality is sharply declining, the increase in sales will be short-lived.

Having this information available will also give you a better understanding of how different factors may affect your overall financial performance over time. Reviewing non-financial KPIs regularly as part of your budgetary process will help you to keep a close eye on your progress and make adjustments as needed.

Overall, non-financial metrics can play an essential role in the success of your budgeting process. Taking them into account and monitoring them closely will help ensure that you are on track to meet your goals. This will give you invaluable insight into how decisions may affect financial performance in the future.

You should review the appropriate measurements for each of these powerful drivers of success to ensure they are adequately included in your budgetary planning.


8. Finalize Your Detailed Planning to Ensure Good Budgeting


The planning process is just as crucial for good budgeting as the budget itself. The thoroughness and accuracy of your plans will ensure that you can actually follow through on your promises in this financial realm.

At the end of the budget process, the organization should have a meaningful plan that anticipates the next 12 months that sets targets for revenues, costs, and headcount. In addition, the budget should be meaningful for each department and function owner, so they understand the vision and their role in it.

To finalize the detailed planning, it’s essential to set realistic goals, consider risk factors, define how progress will be measured, and decide who will be responsible for what actions. The budget should lay out what is expected and allocate the necessary resources to ensure the budget can be achieved in the anticipated timeframe. The budget should also provide each manager with detailed planning and direction.

Rather than saying we need sales to be X by next year, the budget should lay out the step-by-step plans, resources, and direction. By ensuring budgets include input and details relevant to managers at all levels of the organization, it has a high likelihood of being achieved. The budget should include expected outcomes, timelines and deadlines, resource requirements (time/money/personnel), and an outline of contingencies.

Finally, remember that budgeting is an ongoing process, meaning you should continually monitor and adjust your plans as needed. Track progress over time to ensure that goals are still achievable, deadlines are still realistic, and the budget is still within forecasted limits.

Distribute Finalized Budgets to the Business

Once the budget is finalized, the final step is sending out a massive Excel workbook to all the managers, cc’ing everyone you have ever met in the organization.

Once again, I hope you read that and knew I was joking.

While this is how the budget has been done in the past and how some organizations (bless their hearts) still operate, this is not how your organization should operate and communicate the budget if you hope to have any chance of it succeeding.

Distributing the budget should involve granting users the license and accesses they need in the planning systems to review the budget and the relevant details crucial to helping each manager run their department.

As part of the distribution process, FP&A teams should utilize their business partnering skills to ensure each manager has logged into the budgeting system to review the information and also to ensure each manager has the views and information they need and how they need it to support them best.

Track Performance and Accountability Over Time

Ensuring budgets are tied to the appropriate management level, and accountability is assigned, it is critical to ensure progress toward the budget targets is measured using the right metrics. Those who have worked in corporate environments long enough know all the tricks and tactics to slip through any holes wide enough. If the metrics aren’t mindfully designed and monitored, all sorts of misbehaviors will percolate.

From HBR:

“When the manipulation of budget targets becomes routine, moreover, it can undermine the integrity of an entire organization. Once managers see that it’s okay to lie and conceal information to enrich themselves or simply to hold on to their jobs, they soon begin to extend their dishonest behavior to all parts of the company’s management system and even to its relationships with outside parties.

Managers start to feed misleading information to customers, suppliers, and employees, and the CEO and CFO begin to “manage the numbers to influence the perceptions of board members and Wall Street analysts.

When you start rewarding managers for falsifying forecasts and otherwise distorting critical information, you threaten the integrity of your entire organization.”

Thus, these insights from HBR drive home the importance of using the right metrics to utilize your budget to monitor and assess the performance of your business and confirm that your resource allocation is appropriate. You can determine whether you’re on track with company goals by comparing budget or forecast data with past performance.

The critical components of creating a successful budget are people, processes, tools, and the data that underpins them. You can ensure a connected, thorough budget that takes into account every aspect of the business by working across teams, having the appropriate processes in place, and using technology to connect data from different formats and across sources.


9. Refine Your Budget Processes through Continuous Improvement


The final piece of advice to wrap up this budgeting article is to remember to refine your budget processes through continuous improvement. With a continuous improvement approach, you can refine your budget processes to become more efficient and accurate each month, quarter, and year.

Continuous improvement involves identifying areas of opportunity in the budgeting process and leveraging data-driven insights to make small changes that will lead to long-term improvements. By taking an iterative approach, you can make gradual changes that don’t disrupt existing budget processes but allow for ongoing optimization.

Continuous improvement begins with a thorough analysis of your current budget processes. This review should include qualitative and quantitative measures to identify areas where improvements could be made. From there, you need to prioritize those areas based on their importance and potential impact. Once you have identified which areas are most ripe for change, it is time to begin making gradual adjustments.

The key to successful continuous improvement is to develop a systematic approach that allows you to track and measure progress over time. This means setting goals, establishing metrics for success, and tracking performance against those measures. It also means having the flexibility to quickly roll back changes if they don’t yield the desired results and make further adjustments as needed. Continuous improvement requires patience and dedication, but it can pay off with improved budget processes in the long run.

By taking a continuous improvement approach to refining your budget processes, you can ensure that they remain up-to-date and accurate over time. Through regular assessments and the ongoing implementation of best practices, you can optimize your budgeting process for greater efficiency and accuracy in the long run. With the right combination of analysis, planning, tracking, and evaluation, you can ensure that your budgeting process always works in your company’s best interest.




This coming year, there’s no need to dread budgeting season if you have the right systems, processes, and people in place.

When you adopt a modern FP&A approach that closely aligns with your culture and strategy, budgeting will transform from “something that needs to get done” into a driving force for your enterprise.

When used correctly, your budget can unify your organization, create connections, and break down silos, placing finance at the center of all your company’s objectives.

Even further, your company’s budget is crucial to enabling operations and implementing growth. As the tactical component of your business plan, the budget ensures resources are allocated to enable your company to operate profitably, achieve its growth objectives, and keep up with changing market demands when built around your organizational strategy.

If you haven’t made the leap yet, 2023 is the year for your organization to take FP&A, budgeting, and strategy into the future.

– Benjamin Wann


Pivot Table vs. PowerExcel Pivot

Pivot Table vs. PowerExcel Pivot

If you’ve built your models in Excel, this becomes very difficult. You need to go down to the bottom, change some assumptions, roll it all up, and check if you have the number that management wants. If you don’t, you must go down to the bottom again and start over until you roll it all up again. In some organizations, this sort of circular process can take months; it’s expensive, time-consuming, and demoralizing.

Top-Down Bottom-Up Budgeting with PowerExcel

Top-Down Bottom-Up Budgeting with PowerExcel

If you’ve built your models in Excel, this becomes very difficult. You need to go down to the bottom, change some assumptions, roll it all up, and check if you have the number that management wants. If you don’t, you must go down to the bottom again and start over until you roll it all up again. In some organizations, this sort of circular process can take months; it’s expensive, time-consuming, and demoralizing.

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