Budgeting & Forecasting Process Improvement
From Boxing to Budgeting
“Everybody has a plan until they get punched in the mouth.” One doesn’t typically think of Mike Tyson as a sage expert on budgetary process… but one should. No matter how rigorous or exhaustive a company’s budgeting and forecasting processes are (and, for the record, they’re typically neither that rigorous nor that exhaustive), there will be unexpected events, unaccounted for market variables and all sorts of ‘punches’ to address. Improvement is focused on building processes to weather, adapt and absorb those punches – not ignore or disproportionately react to them. At Accordion, we help clients right-size, right-technique, and right-cadence their processes to not only support an effective and accurate budget/forecast, but to support Finance’s role as a provider of strategic insight to management and fund sponsors.
Our Approach to Budgeting & Forecasting Process Improvement
FP&A Takes the Wheel
Too often FP&A is a passenger in the process. An FP&A driven, best-in-class budgeting process has a number of key benefits which Accordion helps bring to fruition: balancing motivational stretch goals with visibility into likely results, eliminating waste and identifying margin expansion areas, pinpointing hidden problems and undervalued activities for increased support, identifying ‘sandbagging’ and ‘cry wolf’ functions, and integrating the planning function with value creation initiatives.
Budgeting A to Z(ero)
Not all boxers are in the same weight class, nor are all budgets built equally. From all-in Zero-Based Budgeting to ZBB-light to baseline plus, Accordion helps clients identify the most appropriate, and most risk-to-reward proportionate, cost forecasting methods. We support clients throughout the entire budgeting lifecycle: from foundation, to creation, to analysis and refinement (including a layered approach to pressure testing via challenge sessions and historical analysis) through to budget presentation and ongoing monitoring.
The Virtuous Cycle of Forecasting
While a better budgeting process yields a better forecasting process (and vice-versa), it behooves companies to lean in on forecasting independently. Enhanced forecasting provides management and sponsors quick clarity into areas of underperformance and overspend, as well as risks and opportunities to the plan. Accordion works with clients to build a better forecasting mousetrap and identify the most appropriate forecasting cadence based on company, sponsor, industry and market variables.
The Accordion Paradigm
If budgeting and forecasting are about weathering the punches, our job is to help make those punches less painful. We help clients reduce the tension inherent in a budgeting process that asks managers to increase their revenue goals while, likely, decreasing their spend. Accordion not only creates a more efficient process, reducing the bandwidth burden, but creates a new intra-company communication paradigm that makes budgeting and forecasting as painless as possible.
Budgets should be aspirational – have an element of faith based on past trends. Forecasts are driven by actual performance and provide the management teams an outlook for the year and an opportunity to course correct as needed.