Budget and Rolling Forecast (vs. Actuals) on autopilot when budgeting in your Excel.
The CEOs and CFOs are starting to prepare for the 2024 budgeting in many SMEs. A budget is a legendary tool for planning the company's growth, cash flow, and finances.
Regardless of how many person-hours have been spent on the budget, we know that 12 months is difficult to predict. You can get much more out of the budget when compared to the actual result.
Comparing and analysing the budget and the actual result helps the company navigate the right direction. Making one or more rolling forecasts alongside budgeting can also be suitable for preparing your company for different scenarios.
The budget is your company's goal
You can think of the budget as the company's goal for the fiscal year 2024. The CEO or CFO leads the company's budget process. The budget defines the most important goals and economic indicators the company wants to achieve during the next fiscal year.
The budget is usually prepared in Excel, where the CFO has put together the sheets for sales, personnel, and procurement goals for the next fiscal year. The company's annual bonuses, investments, and financing are planned & determined based on the budget.
The board approves the budget, which means that the company's management gets a framework in which to act. From a business point of view, the weakness of the budget is that it is prepared once for the coming fiscal year, so its predictability becomes weaker towards the end of the fiscal year.
Budget vs Actuals on autopilot
The realised result means realised KPIs, i.e., it tells how successful the company has been. The output can only be analysed when you have the data for the completed period. With riskrate, your can stay on top on your budget vs actuals. Teams usually prepares budget in Excel, and by downloading it to riskrate, your team can track budget vs actuals variance on autopilot. Get started in less than minutes: → riskrate
Typically, there is variation between the budgeted and actual KPIs. However, a significant or consistent negative difference indicates there's a need to react instantly. The budget has no value if there is no reaction to the changes. Therefore, the purpose of the comparison is to identify the differences and understand the root cause of these changes.
A rolling forecast is your management's tool
Many CEOs or CFOs on global SMBs keep a rolling forecast, or fork, alongside the budget. A rolling forecast is a tool for company management, and its forecast period is from three to 12 months, depending on the business model. When the actual result is combined with the rolling forecast, the management team gets an estimate of the development for the entire financial year.
The rolling forecast also provides a reasonable basis for building different business scenarios. In the scenarios, for example, you can evaluate what the company's profit and cash will look like if sales or personnel costs increase by 20% or decrease by 15% from the current level or what the cash flow or key figures will look like if the company invests in a new product. With the scenarios, the your company's management has prepared various options. With riskrate, your can stay on top on your budget vs rolling forecast (and actuals). Teams usually prepares rolling forecasts in Excel, and by downloading it to riskrate, your team can track budget vs rolling forecast (and actuals) on autopilot. Get started in less than minutes: → riskrate
Let's get started today
Making a budget for the first time is the most challenging because there is no data and comparison base. However, the most important thing is to start today. Sign up to riskrate to get your first budget Excel template and track your actuals vs. budget on autopilot to save your time. Budgeting and forecasting teach a lot about business and help to catch deviations immediately. As your business grows, you also have more data that can help you refine your forecast. When creating a new budget, remember past variations to improve forecast accuracy each time.
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