What do you do if your budgeting and forecasting decisions rely on intuition?

My view, intuition is based on the experience and it from past experience which may act as a good benchmark. However, data speaks and whether it align with the tuition. Therefore, data and intuition works hand in hand rather than in silos.

A budget has to be grounded in data. Without a scientific approach one of the key values of the budget (I.e the comparison of actual results to the budget) will be eradicated. You cannot compare actual data to an intuition led budget and gain the insights / learnings that you would achieve from a similar comparison to a data led budget. It is essential to be able to compare actual to budget and analyse the exact variances in order to better understand both the performance achieved and company strategy for the following period. An intuition led budget is an aspiration. A data led budget is a robust framework which adds value

As a financial planning analyst, relying solely on intuition for budgeting and forecasting decisions may present significant risks and limitations. While intuition can be informed by expertise and industry knowledge, it's essential to complement it with rigorous quantitative analysis. This involves systematically collecting and analyzing relevant data, employing statistical techniques and financial models to identify trends and correlations, and stress-testing assumptions against historical and market data. By embracing a data-driven approach, financial planning analysts can enhance decision-making accuracy, mitigate risks, and provide stakeholders with more reliable forecasts and budgets.

Move to data-driven decisions. Analyze past data & industry trends for more reliable forecasts. Shift to data-driven approaches and historical trends for more reliable budgeting and forecasting.

Balance intuition with data. Ground your decisions in historical financial data, market trends, and benchmarks. Data validates instincts and ensures informed decision-making. Innovation is crucial, but supported by data for certainty in decision-making.

Integrate historical data and insights to the scenarios. One said forecasting is 50% science and 50% art. There’s no shame on relying on intuition but making sure that you analyze the different possibilities is the key in reducing the risk.

Scenario planning is a strategic tool that equips you to handle diverse financial futures. By crafting multiple budget and forecast scenarios, you can explore how different conditions might impact your business. This approach allows you to visualize potential outcomes and make well-informed decisions by considering various possibilities. It effectively reduces the risks linked to reliance on intuition alone, acting as a safety net that provides fallback options if initial intuitive decisions fall short. Essentially, scenario planning offers a structured way to test your gut instincts against a range of potential realities, ensuring your financial strategy is both flexible and robust.

Scenario planning is a proactive approach to financial management. By envisioning various scenarios and creating corresponding budgets and forecasts, we can anticipate potential challenges and opportunities that lie ahead. This technique enables us to prepare for uncertainties and make informed decisions, rather than relying solely on intuition or reacting impulsively to changing circumstances. It's like mapping out different routes before embarking on a journey; scenario planning ensures that we have contingency plans in place, allowing us to navigate through any twists and turns that may arise along the way.

I'm definitely taking this idea of scenario planning as a good advice. Another way to consider it is to value the risks (which I've seen as being the standard approach in a company) This means to define the project risks, to estimate their costs and to consider it in the initial budget to consolidate the benefits in different scenarios. In any case, the reforecasting activity (which is the next point) is what needs to be followed accurately to secure the budget and project benefits

Comece pela proje??o de volumes de vendas, envolvendo a área comercial. Escolha uma regra contábil-financeira eficaz para, a partir dai, gerar as proje??es com seus relatórios e kpi's. Algumas empresas já têm contratos, facilitando a proje??o de volumes de vendas, como diferencial competitivo.

From my perspective, continuous review is integral to effective financial management. It's like fine-tuning a musical instrument; regular adjustments ensure that we stay in harmony with our financial goals and objectives. By consistently comparing our forecasts with actual outcomes, we gain valuable insights into our financial performance and can identify areas for improvement. This ongoing process not only enhances the accuracy of our forecasts but also strengthens our ability to anticipate and adapt to changing market conditions. It's a proactive approach that empowers us to stay ahead of the curve and navigate confidently towards our financial objectives.

Budgeting and forecasting are dynamic processes that demand ongoing review and adaptation. Regularly aligning your forecasts with actual financial outcomes allows you to fine-tune your strategies and enhance their accuracy. This iterative method ensures that your intuitive insights are consistently validated against tangible results, fostering a sharper financial acumen. Over time, this practice not only improves the precision of your predictions but also deepens your understanding of the financial landscape, enabling you to make more informed decisions. By continuously revisiting and refining your financial plans, you ensure they remain relevant and effective in achieving your business objectives.

Regular re-forecasting is a must to manage a project. This iterative process can't be skipped. This is not even in relation to the initial budget done by intuition or not, the reforecasting is a basic regular activity of project management

By embracing collaboration in the budgeting process, you can tap into the collective wisdom and expertise of your team. Collaboration not only improves the quality of budget decisions but also fosters a sense of ownership, engagement, and commitment among stakeholders.

Collaborating with colleagues who bring diverse expertise to the table enhances financial planning. By pooling insights from various departments, you can challenge and refine your intuitive assumptions, gaining a more holistic understanding of your business. This collaborative approach enriches the budgeting and forecasting process, integrating multiple perspectives into a comprehensive strategy. Embracing this collective wisdom allows intuition to be one of several critical inputs, contributing to a more robust and nuanced financial plan. Such a method ensures that decisions are well-informed and inclusive, capturing a broad spectrum of business realities and opportunities.

Collaborative input enriches financial planning by incorporating diverse expertise. It's like a puzzle; each member brings unique pieces that form a clearer picture. For instance, when planning our marketing budget, insights from the sales team on customer trends refined forecasts. Leveraging collective wisdom not only enhances accuracy but also fosters a culture of collaboration and innovation.

As well as for the reforecast activity which is a must, to build a budget has to involve the full team. There's very little chance to build an accurate budget if we don't collect from the project team the inputs of the tasks which needs to be performed and how much time a cost this will take

Refining your intuitive skills in budgeting and forecasting parallels improving any craft: it requires both practice and the right resources. Investing in specialized training that focuses on advanced financial analysis and forecasting techniques is crucial. Complement this knowledge with robust tools that help translate your instincts into quantifiable data. Specialized platforms offer structured approaches and predictive analytics to back your gut feelings with solid data, enhancing your decision-making capabilities. This combination of training and technology not only sharpens your instincts but also embeds your intuitive decisions within a framework of analytical rigor, leading to more precise and reliable financial outcomes.

Training and tools are indispensable for sharpening budgeting intuition, akin to sculpting a masterpiece with the right chisel and expertise. For instance, our team attended a financial analysis workshop, refining our skills in interpreting market data. Moreover, adopting advanced budgeting software streamlined our forecasting process, translating intuitive hunches into quantifiable insights. By combining training with cutting-edge tools, we elevate intuition to a strategic asset, empowering smarter financial decisions.

Incorporating risk management into intuitive financial decisions is paramount for safeguarding against unforeseen challenges. For instance, anticipating market volatility, we allocate contingency reserves to cushion against potential downturns. Additionally, we diversify our investment portfolio to spread risk and maximize resilience. By integrating risk mitigation strategies, we bolster confidence in intuitive choices, ensuring preparedness for any eventuality.

A intui??o é uma ferramenta valiosa na tomada de decis?es, mas como saber quando confiar nela? é uma forma de conhecimento que n?o passa pelo crivo da raz?o ou lógica. Ela pode ser vista como uma manifesta??o do nosso conhecimento interior. Ao decidir sobre Or?amento e Previs?es suportado pela intui??o é absolutamente relevante identificar e mensurar os riscos. Dois fatores a considerar s?o: materialidade e reversibilidade. Quanto menor a materialidade e maior a reversibilidade; acredito ser melhor a aplicabilidade da Intui??o.

Well, risk management is finally very close to the scenario planning, this is a way to say "and what if this happens or if we do this or that, what would be the consequences and how much would it cost?"