If your company prepares a periodic long-term strategic plan, align your budget assumptions and objectives with the long-term plan. This aligns the budgeting process with the organization’s overall strategy.
Step 3: Identify Financial and Non-Financial KPIs
Next, pinpoint the key performance indicators (KPIs) driving your business. These could include financial metrics like revenue and expenses and non-financial factors such as customer satisfaction and employee engagement.
Step 4: Set Assumptions, Guidelines, & Calendar
Establish clear assumptions, guidelines, and any specific instructions for budget preparation that will shape your budget. Create a timeline or calendar to keep the process on track and ensure everyone knows the deadlines.
Step 5: Training
Now that you have done your homework, you can identify the training needs of everyone involved in the budget process.
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Are there any newcomers to the team? Not only in finance but across the board.
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Is everyone thoroughly familiar with the budget process of the company? Which departments/individuals struggled the most in the last budget season?
Organize a session to align the expectations. Following the process outlined in Step 1 will enable you to deliver the session with maximum effectiveness.
Phase 2 – Budget Preparation and Review
Step 7: Explain Budget Templates
When I say templates, it means the medium your organization uses to prepare and consolidate budgets. You may have a consolidation tool or work on Excel templates. Either way, explain the budget templates to each department or team responsible for their budget. These templates should contain clear instructions and guidelines for filling them out accurately.
Step 8: Conduct Pre-Submission Meetings
Schedule regular pre-submission meetings with department heads to review their budgets. Address any initial concerns or questions to streamline the submission process.
Step 9: Begin Initial Budget Review
As budgets start coming in, initiate the initial budget review process. Ensure completeness and accuracy align with the organization’s goals and guidelines.
Step 10: Review & Clarifications
Review budget submissions and seek clarification from department heads as needed. Make sure all figures are accurate and well-documented—request any potential changes that need to be made based on new information or evolving circumstances.
Tip: If you have worked with your CFO, you should clearly understand what they want to see during the initial budget review. Ensure you have answers to all those questions.
Phase 3 – Consolidation and Submission
Step 11: Consolidate Departmental Budgets
Combine all departmental budgets into a comprehensive organizational budget. Ensure that all inputs and changes are accurately incorporated.
Step 12: CFO’s Review & Presentation
Present the consolidated budget to the Chief Financial Officer (CFO) for their review. Provide a detailed budget overview, including key assumptions, financial projections, and any significant considerations.
Step 13: CFO’s Comments & Adjustments
Note any comments or adjustments the CFO directs during the budget review process. This may involve revisiting departmental budgets for refinements. Communicate those changes to the departments and ensure that they understand the ask and are aligned with the changes.
Step 14: Verify the Accuracy of Revised Submission
Double-check the accuracy of the revised budget submissions to ensure they accurately reflect the changes made during the review process.
Step 15: Consolidate the Revised Budget
Once revisions are complete, consolidate the revised budget to reflect the final version. Ensure that all changes are accurately reflected.
Phase 4 – Approval and Budget Upload
Step 16: The Executive Committee / Board Presentation
Prepare presentations summarizing the budget for approval by the Executive Committee or Board of Directors. Highlight critical aspects, financial implications, and strategic alignment.
Step 17: Present to the CFO
Present the final budget presentation to the CFO, providing a comprehensive overview and addressing any questions or concerns raised during the review process.