Question

Would a forecast budget work good for an established organization that has volatile changes throughout the year? My bigger question here is are there other factors besides how established the organization is that may determine which type of budget they need to use?

Answer 1

IMPROVE VISIBILITY INTO YOUR PERFORMANCE.

Unfortunately, traditional line-item budgeting does not adequately link financial investments to results or outcomes, limiting the ability for in-depth analysis and understanding of the real ROI for any given line of business or initiative. Organizations should consider implementing a performance-based framework that allocates resources to specific objectives or activities based on appropriate metrics;

DE-STRESS YOUR BUDGET PROCESS.

Traditional budgets are created based on requests from competing stakeholders, each justifying their projected expenditures based on their departmental needs rather than the overall goals of the organization.

UPDATE YOUR BUDGETS REGULARLY TO REFLECT REALITY.

Static budgets and multi-year financial plans produce high level financial targets and constraints, but not the roadmap to success. However, typically, once budgets are adopted, no further changes are allowed. If material deviations occur during the year, it can paralyze a company that does not have an efficient process for evaluating the causes of these changes and adjusting the budgets and plans accordinglY