Even if one complains about spending too much time “making budget”, and although some companies are trying to do without it, the budget remains an essential means to mobilize the various stakeholders in an organization and aim at the consistency of the whole.
Decline in the first year of the strategic plan
The budget process plan covers methods used to control measure and understand the performance. The aim is to better adapt all operational decisions to the strategy of the organization. The budget is the opportunity for leaders to define the priorities for the short and to explain them to operational managers.
Define the objectives and plans of local action
“A general purpose non broken down into objectives and local plans of action does not take place to be”. Budgetary objectives are reflected in the field standards, quantities consumed, staff needed … At these objectives are the levers that influence performance. Their choice depends on the quality and relevance of decisions.
Forecast revenues and expenses for the year, and the result
The budget is primarily a forecasting tool in the future. Commercial budget aims to predict turnover or for revenue. Other budgets provide marketing resources, production and overhead costs. In summary, we prepare a profit and loss forecast.
Engage operational managers on a “contract”
Budget managers prepare their budget: they complete financial data using the operational elements, highlight the original numbers, focus on the levers action. He then returned to defend their budget to their direction. They will be evaluated during the following year on the commitments made.
Communicate throughout the whole year
“Throughout the race, the copilot scrolls the roadmap, prepared before the race”. Controller management postpones, each month, differences that he observes and analyzed the instrument panels, in order to alert the more quickly on a drift. During the meetings results analysis it verifies that management information is properly used by operational.