What happens when the planning process is broken?
- Functional plans out of sync with business strategy
- Too much inventory – but never where or when it’s needed
- Cash flow and/or working capital crisis
- Poor customer service
- Inability to respond to changes in the market and new sales opportunities
- Lost sales resulting in missed revenue goals
- Lack of financial insight to make effective decisions
- Inaccurate financial projections leading to
- PROFIT WARNINGS
- INACCURATE INFORMATION TO INVESTORS
- INABILITY TO RAISE FUNDING
How to improve planning process?
- Start with aligning on the purpose, use and value of the budget process
- Reduce and remove complexity
- Standardisation of process and systems
Key characteristics of best practice processes
- Control the number of budget iterations developed
- Reduce the number of budget line items
- Flexibility modelling of scenarios based on differing business assumptions
- Standardize budgeting methods with the rest of the company and what senior management is expecting to see
- The link to strategy needs to be clear and clearly linked
- Base budgets on business drivers
- Align incentives and rewards to strategic objectives
- Link the annual planning process to rolling forecasts and management reporting
- Active engagement of the business in the budget process
- Done by them and not to them, Controlled process and communication
- People are key
- The right team – finance and business
- Analytical capabilities
- Big picture and the detail
0 comments:
Post a Comment