Financial Planning, Budgeting and Forecasting in the New Economy: An Aberdeen Report
Best-in-class organizations are building solid foundations from which they can develop accurate budgets and improve their forecasting capabilities each and every day. Using tools that provide increased visibility and flexibility allow such companies to make effective decisions that can impact their corporate performance and profitability.
Compare your organization's processes with those that successfully manage unexpected financial stresses and effectively predict and mitigate in order to make sound and informed decisions that align with corporate objectives.
This free report from Aberdeen Group (a $399 value) reveals the strategies that Best-in-Class organizations use to achieve budget and forecast accuracy along with improvements in the area of profitability.
Executive Summary
A sound financial plan is the vehicle which clearly states strategic business objectives in financial terms. A well-prepared budget forms the foundation for decision-making throughout the fiscal year. However it is the forecast which allows the business to adjust future expectations based on recent actual performance. With a renewed focus on growth as a strategic goal, and alignment of strategy with corporate performance, companies that hope to achieve Best-in-Class status must be armed with tools that provide visibility and flexibility to strike a balance between aggressive plans for recovery and caution.
Best-in-Class Performance
Aberdeen used five key performance criteria to distinguish Best-in-Class companies. These top performers are notable for achieving the following
aggregate average results:
- 104% overall budget accuracy (ratio of actual performance to budget)
- 103% forecast accuracy
- 15% improvement in profitability year over year
- 96% always or usually finalize budget prior to the next fiscal year are 34% more likely than all respondents to streamline the process with key technology enablers
Competitive Maturity Assessment
Top performers in this study shared several common characteristics. The Best-in-Class:
- are 125% more likely to receive alerts triggered by external events and 121% more likely to receive them for internal events
- are 89% more likely to establish enterprise-wide collaboration across all departments / functions
- are 400% more likely to link compensation to budget performance for all employees
Required Actions
In addition to the specific recommendations in Chapter Three of this report, to achieve Best-in-Class performance, companies must:
- Use technology to automate and assist in the budgeting process
- Have visibility into all factors and collaborate with all stakeholders
- Consider alternative scenarios and have the ability to change forecasts, plans, and budgets mid-stream
To read the remaining chapters of "Financial Planning, Budgeting and Forecasting in the New Economy," download the entire report today. "Financial Planning, Budgeting and Forecasting in the New Economy" by Aberdeen Group is brought to you by PROPHIX.