WHAT IS THE NEXT ACTION FOR ORGANIZATION PROGRESS?


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
  1. PROFIT WARNINGS
  2. INACCURATE INFORMATION TO INVESTORS
  3. 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
  1. The right team – finance and business
  2. Analytical capabilities
  3. Big picture and the detail


CONVERSATION

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