How can you align your budgeting and forecasting strategies with your organization's mission and vision?

From my experience, I cannot recall a budgeting or forecasting process that was disconnected from the organization's mission, vision, and values. In multinational companies in the medical device industry, the overall budgeting guidance is established from the headquarters, moving through corporate functional areas, business divisions and their respective finance departments, as well as operations and supply chain leadership, until it reaches the plant. Employees often had to complete training on business practices, conflicts of interest, and financial policies to ensure the company's mission and vision were incorporated into daily activities and financial transactions. Regular monitoring of key performance indicators ensured compliance.

While mission and vision are permanent and long term, they also need to be arranged in a manner that each year leads to ultimate destination. The yearly mission and vision can be aligned to understand in financial expectations of different stakeholders including R&D, Marketing, Financial, employees and like. Such expectations can then be guiding factor while measuring the budgeting drivers.

I have often thought that an outcome-based budgeting and forecasting is a great approach to fostering alignment to your organization's mission and vision. Budgets and forecast are often markers of costed inputs and their allocations across the organization - which is quite important - but can be misleading. Outcome based budgets articulate your key result points and how you measure those results. Results that have a direct relationship to your organisation's strategy, mission, vision. Budgets by themselves only allocate resources. What you want to know is the results of that budgetary allocation.

Mission and Vision are simple concepts but, very often, not properly defined. Mission is the reason why the company exists. Its connection with budgeting/forecasting is more on the sense of "call on duty" and emotional attachment. Be sure that all choices you make align with what you are! Vision represents a qualitative/quantitative target the company wants to achieve in a long term, projects the company into the future. To achieve it, you need to drive/push the company that way, you need a Plan and budgeting/forecasting must be an important part of that plan and aligned with the targeted Vision. There must be a complete alignment of the short term exercises with the long term expectations. It is impossible to reach a target without a Plan.

O processo or?amentário compartilhado com stakeholder durante sua produ??o tem maior chance de ser aprovado com maior agilidade, pois será compreendido com mais facilidade e terá rotas corrigidas durante o processo e n?o somente no momento final de apresenta??o/aprova??o.

The worst thing that a finance professional, or team budget owner, can do in developing their budget is exclude the perspective from others, especially key stakeholders. Without the voice of those impacted by the budget, it can miss the target on allocating funds in the most impactful and meaningful way. Before the process even begins, the 1, 3, and 5 year strategic plan from leadership and decision makers must be factored in - if you don't know what direction they want to take the company, you won't be able to budget appropriately and plan for meaningful initiatives. Once this top down knowledge is gained, you should convene with other stakeholders, and understand how the plan will impact them and their team - cohesive alignment is key.

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I don't agree that budgets are not static. The budget for my company is a roadmap of our strategic plans for a specific period in time, based on what we know at the time the budget is finalized. However, continuous forecasting (that is not static) with input from key stakeholders, allows the company to show how unexpected business needs, economic conditions, etc. might dictate a deviation to the original budget. This forecasting allows the company to pivot and make changes, as needed, in order to be successful.

Company’s vision and mission provides an overall guide as to how to operate and what targets to set and achieve. Once those are identified, planning, budgeting and forecasting on what to do to achieve those. Its all about numbers however think about conducting your activities the cost effective and efficient way. For instance, if there are tasks you can perform internally do them then get a third party to verify for transparency purpose. If it’s a legal requirement that requires a third-party then let the vendor conduct it while you be the verifier. Always allow room for sharing lessons learned from previous mistakes, use that to develop improved solutions or mitigations for the current task/project you are working on.

Flexibility and agility are key! Build flexibility into your budget to accommodate unexpected changes or opportunities. This allows you to adapt quickly while maintaining a realistic approach.

This is where effective strategic planning links long-term mission and vision with short-term goals and objectives. Often times, budget challenges are different each year, and an organization (whether public, private, or nonprofit) needs to be flexible enough to meet and overcome those challenges. Strategic planning creates a nexus where all organizational objectives can be harmonized.

In my experience adapting to changing contexts is crucial in budgeting and forecasting to ensure that your organization remains aligned with its mission and vision. While your organization's purpose may remain constant, the external and internal factors that affect your operations and outcomes are subject to change. These factors can include changes in funding, regulations, demand, competition or technology.

From a non-profit perspective budget must be planned closely and with high level of detail, as the use of these resources usually are presented to third parties or regulatory bodies. The methodology I would recommend is a decentralized budget request which has different layers of approvals, and clear policies to understand the rules of a proper process. Budgets are proposed expenses and investments, but be granted with a budget doesn't imply that it should be used.

As a commercial sales professional, I wholeheartedly agree with the importance of aligning financial planning with an organization's mission and vision. From a commercial sales perspective, I would like to add that the effective alignment of budgeting and forecasting strategies can significantly impact an organization's sales performance and overall success.

There are times when budgeting and pricing systems are very helpful at building robust and consistent budgets and proposals. However, it can also be done in a spreadsheet program. The key is to embed the models and resource accounts needed to perform the work reflect the relationship between input and output, and it reflects the accounting standards used by the organization. If you do use a spreadsheet, make sure that your formulas are protected, your input cells are coded as such, and that there are check values to make sure it ticks and ties. Budgets should be backed up with either historical trends and correlations or some thought into the basis of estimate.

For not for profit organizations it is really helpful to prepare a zero based budgeting. Most of the countries prepare a fixed budget and inflate it over the years. There are negative consequences as a result of fixed budget, offices tend to spend or utilize the full budget in order to get the same level of funds for the next year. However when a zero based budget is used, it is helpful that all the activities are ranked and spend based on the priority level of the budget.

Pour aligner le processus de budgétisation et de prévision à la vision à long terme, cela implique effectivement que les outils et méthodes de gestion des données (collecte, analyse et présentation) soient adaptés au niveau de précision de l'information utile au pilotage de l'organisation. A titre d'exemple une entreprise de téléphonie mobile avec 12 millions d'abonnés actif aura besoin d'un logiciel d'analyse data pour faire les prévisions or cet outil dans une entreprise où on manipule moins de données ne sera pas forcément utile.

Dynamic budgeting reads like an oxymoron as when we talk about budget it implies target setting and setting a moving target in real life can be counter productive from the controls view point. Setting a dynamic budgeting and forecasting without composing on controls is a difficult job.

Budgets need review for making decisions during the year; and for the variance analysis to explain what is going on and where you expect to end at the end of the year. The process should also be reviewed and improved. But don't change the budget during the year. That is just churn and waste of effort.

A company's mission and vision should be reflected in its financial goals to ensure that forecasting and budgeting are in line with them. Review and modify budgets on a regular basis in light of evolving business conditions, bearing in mind the goal and vision statements. Include important stakeholders in the budgeting process to collect a variety of viewpoints and promote a comprehensive strategy that advances the organization's overarching objectives.

Accountability is key and this requires structures in place to review and improve. The use of resources is a privilege and it should be measured with defined KPIs to understand the need and impact.

I fully agree that budgeting and forecasting should be seen as ongoing, dynamic processes rather than static, one-time events. Continual review and improvement are vital to keep them aligned with the evolving mission and vision of the organization. Incorporating stakeholder feedback, learning from both successes and failures, and leveraging data and evidence for decision-making are critical practices. Celebrating achievements while acknowledging challenges fosters a culture of excellence and impact, ensuring the organization remains agile and responsive to change.

Here are additional concise considerations: 1. Stakeholder Engagement: Involve key stakeholders in the process. 2. Performance Metrics: Develop metrics aligned with the mission and vision. 3. Scenario Planning: Anticipate changes and adjust strategies accordingly. 4. Continuous Improvement: Regularly refine processes to align with evolving goals. 5. Training: Provide finance teams with relevant training. These steps enhance alignment between budgeting/forecasting strategies and the organization's mission and vision.

I fully agree that the budget should align to the organisation's strategy. After all, the budget is the tool that will be used to implement this strategy. Some organizations become trapped in trying to micromanage the budget. A lot of time is spent in checking every single amount and whether it has been budgeted or not. And if not, this is where the endless discussions and the going back and forth begins. If something aligns with your strategy, then the budget should not be the limiting factor. If a business opportunity comes, we will not take it because the associated costs were not budgeted for? The same way your strategy is the path to reach your vision, the budget should also be managed the same way.

Yes, of course align budget with strategy. The difficulty is that returns on good strategic spend are long term but the focus of most budgets is on the next 12 months. Long term forecasts are fraught with error so that creating a financial blueprint to justify a strategy needs to be reviewed, discussed, and amended regularly.

It’s important to remember the difference between mission and vision to understand the nuance of linking budget to those two organizational focus areas. The mission is about why you exist. Often times this can be considered in terms of “keeping the lights on” to maintain expected levels of service with current products or service offerings. The vision is where you are trying to head, and often a strategic plan gets developed to assist in achieving this long-term goal. Finding balance between the two is crucial - and understanding that you don’t always need more or new to accomplish both is paramount. This is why budgeting and performance are so interwoven.