ADVANCED BUDGETING

Criticism of the classical budgeting process is on the rise: too long-winded, too expensive and too imprecise – that is the verdict of financial controllers, CFOs and CEOs. The main thrusts for change range from solutions which propose small improvements to the classical budgeting process through to radical concepts, such as Beyond Budgeting, which call for budgeting to be abandoned entirely.

Advanced Budgeting – Horváth & Partners approach to revamping planning and budgeting dispenses with radical cultural change. The underlying focus of Advanced Budgeting is to combat the lack of efficiency and effectiveness in traditional planning and budgeting methods, thereby increasing planning quality and reducing the cost and time necessary for the budgeting process. When implementing Advanced Budgeting, you have a portfolio of tools at your disposal from which, depending on the type of your organization and the situation you find yourself in, you can choose the most suitable and introduce them step-by-step. The main principles of Advanced Budgeting for redesigning planning and budgeting are:

• Integration: joining all sub-plans within your company, i.e. integrating both operative and strategic planning and integrating planning for the balance sheet, P&L, costs and earnings
• Targeting: adopting budgets tailored to reach specific targets, i.e. budgets which reflect your company’s strategy
• Reducing complexity: Defining the level of detail according to how important your planning content is. In many areas, top-down budgets on an aggregated level are sufficient
• Continuity: making budgets more flexible to enable you to react more swiftly to market changes, e.g. by renouncing the calendar year and implementing rolling forecasts where necessary

The Advanced Budgeting concept from Horváth & Partners is based on extensive and diverse experience gathered from many different industries over a long period of time. It has already been implemented in many companies.