Forecasting
has many advantages:
- Less time consuming
since often forecast at higher level with less detail
- less cost since less
time7% of companies say budget in obsolete before year starts
- more accurate since
often done more frequently
- Avoid minimization
exercise because organization pays based on performance and not making
budget
- Can consider volume
and can use flexible budgeting
- Can incorporate
Activity Budgeting which shows activities which is way employees think.
Traditional Budgeting has many disadvantages:
- Time consuming
- Costly: (e.g. for a
Fortune 500 company with a budget department costing $500,000 it was
calculated to cost $5,000,000 to create and monitor the annual budget).
CFO said he was not getting a good return on time and dollars spent in
budgeting
- 27% of companies say
budget in obsolete before year starts
- 67% of companies say
budget is obsolete before June
- Minimization exercise
as employees often sand bag in order to ensure their bonus
- Does not consider
volume unless organization uses flexible budgeting
- Employees don't think
phone, electric, depreciation, amortization. They think in terms of
their activities.
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Call John Antos at 972-980-7407 to find out how Next Generation
Forecasting can help you reach your goals and give your peace of mind.
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