Financial Skills: Planning forecasting and budgeting

Audience

Anyone with significant budgetary responsibilities will benefit from attending this event, particularly:

• Managing directors
• Finance directors
• Strategic business unit managers
• Other directors and senior managers
• Management accountants

Skills Gained

• Translate strategy into results
• Generate a business plan that drives organisational activity
• Ensure realistic forecasting
• Allocate appropriate resources
• Set budgets that can be met
• Identify and manage key risks
• Avoid the weaknesses of conventional approaches to budgeting

Above all, this programme will show you how strategy, business planning, forecasting and budgeting should fit together and support one another and how to make this happen in your own organisation.

Course Outline

Creating business plans from the strategy

• The meaning of strategy
• A technique for translating strategy into plans - positioning and capability
• Is the strategy financially viable? - assessing value
• Ensuring plans are robust and complete - the strategy tree

Forecasting

• Key elements of a successful forecasting process
• Involving all the key players to help reach a realistic but challenging forecast
• Identifying and providing relevant data
• Providing simple choices for the assumptions underpinning the forecast, avoiding complex, impenetrable formulae
• Recording assumptions and choices
• Avoiding distortion caused by incentives
• Overview of the main mathematical techniques
• Technique for creating plans based on forecasts in an uncertain world
• Linking forecasts to the business plan
• Modifying the plan if the initial forecast isn't satisfactory
• Linking forecasts to internal resource needs
• Using cost drivers
• Determining which internal resources will be affected by the forecast - and by how much
• Identifying capacity constraints and spare capacity

Achieving cost reduction

• Methods for building tangible cost reduction plans into the budget rather than unsubstantiated promises - the power of activity-based techniques

Overcoming the problems of conventional annual budgeting

• The conventional annual budget
• Purposes and weaknesses
• Culture issues
• Arguments for and against abandoning the annual budget
• Rolling forecasts and budgets
• The benefits of rolling forecasts and budgets
• What has to roll?
• Techniques for rolling the budget without enormous effort and without losing accountability
• Budgeting for overhead resources - special case
• Ensuring the budget reflects the strategy
• Timing: reviewing the strategy just before setting the budget
• How continuous budgeting helps the timing
• Making sure that plans for change are fully integrated in the budget
• Making budget reviews effective
• The importance of budgeting outputs as well as inputs in reviewing performance
• Picking the key performance measures for tracking progress
• Reporting performance and having a robust process for doing something about deviations from plan
• Getting effective accountability
• The nature of accountability
• Identifying the underlying reasons for variances
• The double-edged nature of targets - making sure they promote good not ill
• Systems issues
• Making the forecasting and budgeting processes effective as well as efficient
• What kind of software: spreadsheets or application-specific?

Risk

• How to assess the risks associated with forecasts, plans and the budget
• Drawing up plans for avoiding, monitoring and mitigating risks - the risk register
• Stakeholder analysis

Financial Skills: Planning forecasting and budgeting / MD-PFB