Anders Liu-Lindberg en Directivos y Ejecutivos, Accountants, Economistas e Financeiros Senior Finance Business Partner • Maersk Line A/S 19/5/2016 · 3 min de lectura · 2,5K

Now You Wish You Were Beyond Your Budget

It’s not long ago that I wrote about a long journey you were about to embark on in “Don’t Tell Me You’re Still Doing Budgets?” and at this same time last year I gave you the exact same warning I will give you now in “3 Reasons Your Budget Is Already Outdated”. Your precious budget will never hold up (for good or bad). It just never will. The world always develops differently than your assumptions. However, you still decide to produce a budget every year despite at this time wishing you were already beyond your budget. I have made clear-cut recommendations in the previous posts, but you don’t want to follow them. So let’s discuss how to make the best of a bad situation. 


Good, but even better if…  

So, here it is how to make the most of your budget followed by an even better if you went beyond your budget. 

  • It’s good that you have a budget because it provides a framework for the activities your company wants to do during the year. It would be even better if you realized that, because the reality is almost always different from your assumptions, you need to continuously evaluate what activities are the most profitable ones for your company.
  • It’s good that you have a budget because it gives you a chance to discuss with all department heads around how they see the coming year and what wishes they have for hiring, training etc. It would be even better if you realized that this was a continuous exercise where more people could be needed in certain departments due to an increased activity level whereas others might have to restrain from hiring or even let people go. If hiring an extra person makes your company more profitable it might be a good thing to do despite this FTE not being in the budget.
  • It’s good that you have a budget because you now have a forecast for the coming the year. It would be even better if you realized that the forecast is never realistic because it’s a negotiated number so you need to produce unbiased forecasts. While you’re at it why not make them rolling so you don’t bump into the annual forecasting wall in the middle of the year when there are only 6 months left of your budget and the new one still isn’t ready.
  • It’s good that you have a budget because it gives you a benchmark to explain how your business actually develops. It would be even better if you stop explaining your numbers against how you saw the world 6-9 months ago, but rather explain developments one-quarter (or even month) at a time. Rolling forecasts will make this possible and give you a chance to always catch up with an ever-changing re