AFP FP&A Guide
A Better Budgeting Process
Budgeting Pain Points
Almost everyone who touches the budget has a gripe with it; here is what finance leaders are saying behind closed doors.
“Management does not recognize the effort required to create the budget.”
“Top-down expectations conflict with bottom-up builds.”
“The metrics used to manage the business are different than the budget drivers.”
“So many iterations! One more change … last-minute decisions … effects that cascade through the model.”
“If I do budgeting the same way again next year, fire me.”
“Operations sometimes wants to avoid accountability and considers the budget to be a ‘finance activity.’”
“Not all requests can be approved, leading to conflict.”
“People managing to the budget can create perverse incentives to maximize their incentives rather than long term value.”
“Reality quickly makes the budget out of date.”
So Why Do We Budget?
We budget to align corporate strategy with action and resource allocation among:
- LEADERS who run the company
- OWNERS who want value for their investment
- MANAGERS who implement the plan