The process of budgeting and forecasting provides a robust foundation for ensuring that a business delivers when it comes to strategy and results. It’s an opportunity to ensure that resources are correctly allocated and that goals are realistic, both in terms of enabling the business to get where it needs to go and with respect to the means currently available. Better budgeting and forecasting can enable a business to respond to changing conditions, be more flexible and more effectively achieve objectives. From technological change to shifts in perspective, the future of budgeting and forecasting could give businesses more options to do just that.
The future of forecasting
The element of forecasting has a significant role to play in the progress a business makes as well as the accuracy of the direction in which it is travelling. It plots expected performance based on a range of different data drawn from across an enterprise. The benefits of staying on top of changes in forecasting include being able to make real time decisions to adjust where objectives are going to fall short and to ensure that the business doesn’t miss out on opportunities as they arise because of a lack of insight or awareness. The future of forecasting is going to require enterprises to leave behind forecasting that is rigid and based around a specific point in time. Instead, rolling forecasting is likely to become the norm, integrating flexible goals that adjust to take into account shifting circumstances.
The future of budgeting
Budgeting is simply the method that an organisation uses to ensure that there are resources in place to enable objectives to be met. However, the process of budgeting has traditionally been opaque and limited by specific timing windows, such as annual or quarterly. As a result, budgeting processes are often not agile and can hold a business back. The future of budgeting for more successful business is to use the wealth of technology that exists to integrate budgeting into operations and make the entire process more transparent. Instead of budgets being restricted to management viewing, the entire business will be able to see how resources are allocated to goals and what the assumptions are on which budgets and forecasts are based.
The relevance of planning
A well-informed strategic plan provides an opportunity for a business to identify the activities that will move it in the direction of specific, defined goals. Issues currently arise as a result of separation between financial and operational planning processes. In future these two will need to be better integrated with enterprises leaving behind discrete, function-based activities for a more holistic approach. More flexible planning that is informed by data in real time can create opportunities for more responsive and accurate decision making across the business.
Overall, the future of budgeting and forecasting demands a more flexible and agile outlook, moving away from separation of the financial and operational – and from rigid scheduling – towards a rolling and integrated approach.