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s your organisation’s budget ready for
FM-MAGAZINE.COM
its own brand. Using new tools and
the next disruption? Although some approaches “will demand a
sectors were particularly hard-hit by transformation of the finance team’s
the uncertainties of the past two professionals from business analysts,
Iyears, given the length and impact of who focus on what has happened, to data
the COVID-19 pandemic and the ongoing analysts, who tell you what will happen”,
effects of the war in Ukraine, there are he said.
very few industries that have come While many organisations have
through the past two years unscathed. adapted traditional budgeting to the
This has left organisations seeking uncertainties of the past two years,
new ways to be nimbler in their budgeting Aubrey Joachim, FCMA, CGMA, a trainer
and to enhance forecasting methods so and coach who works with organisations
they are prepared for whatever may come throughout the world, advocated
next. When CFOs and other finance dropping current budgeting approaches
leaders were asked what they will focus entirely. “The traditional budget mindset
on enhancing in 2022, the top choice looks at organisational, financial, and
(72%) was improving the flexibility of strategic performance from a long lead
budgeting and forecasting, according to a time, set well before the actual numbers
September 2021 Gartner survey. The same come in,” he said. “We are in a 24/7 cycle,
percentage of CFOs expected to have so that is not suitable to a changing
either significant involvement or full environment.”
ownership of initiatives to develop more Joachim, who is a past president of
agile budgeting and forecasting processes. CIMA, recommended engaging in a
“The disruptions of the past year did change management process that can use
create unpredictability in pulling the many available tools in new ways. When
budget together and make the budget a he headed a finance team in a corporate
very challenging yardstick for environment, he told managers that
performance evaluation,” said Jasper instead of giving them budgets to meet,
Chung, ACMA, CGMA, head of corporate he would simply challenge them to do the
development, Asia Pacific, for the New best they could. “It encouraged them to
York Times Co., based in Hong Kong. use their own initiative and creativity,” he
But flexible budgeting techniques said. It also prevented them from trying to
aren’t merely a response to the pandemic. meet established goals despite an
Even before COVID-19, flexible budgeting unforeseen downturn or supply chain
approaches enabled companies to react problems, from spending their entire
more quickly to risks and opportunities budget on items they did not truly need,
and to understand how to better use or from slowing down efforts once initial
available resources. Going forward, budget numbers were reached.
flexible budgeting techniques will “Remember, too, that using
continue to provide strategic advantages. sophisticated tools does not have to mean
This is a good time for finance teams to added complexity,” Joachim said. “At the
review their own yardsticks to determine end of the day, data analytics is only a
how new approaches can enable them to platform for doing something that
respond better to an unpredictable finance would otherwise do as a basic
environment. Whether it’s a matter of foundation,” he said. It is a way to gather
shifting priorities or changing the entire and manipulate existing business
budgeting and forecasting mindset, there knowledge for decision-making that can
are a number of steps organisations can be performed on a basic spreadsheet.
take to add flexibility to the process. When he worked in industry, Joachim
employed data analysis long before
Change the mindset current data analytics tools were
To drive flexibility within the available, using business knowledge as
organisation, finance team members well as regression analysis, decision trees,
must be ready to reconsider their own and activity-based costing, among other
role, said Chathuranga Abeysinghe, tools.
ACMA, CGMA, lead data evangelist at MAS
Holdings in Colombo, Sri Lanka, an Shorten the budgeting cycle
apparel manufacturer for international The significant and wide-ranging
brands that also designs and distributes disruptions of the pandemic have
June 2022 I FM MAGAZINE I 17