Technology today makes it easier than ever to integrate accounting systems, financial forecasting systems and dashboards used to measure key performance indicators (KPIs).
At the same time, the uncertainty of the economic recovery and poor historical data for many companies during the past 2 and a half years has made it difficult for sales, operations and financial managers to forecast budgets on a calendar year basis.
Because of these two factors, and because many managers have found that using a rolling 12 month budget is provides a more accurate end result, there is an increasing trend toward using the dynamic budgeting process.
Implementing a dynamic budgeting process can have some surprising benefits that you may not recognize.
High quality dynamic budgeting is a process that must involve many people in your company. Since the budgeting process is always ongoing, each department manager involved will likely become better at creating their input to the budget.
Having monthly or quarterly budget reviews helps keep managers constantly thinking through what operational activity they need to be concerned with to make their cost and income goals. It helps keep everyone focused on those operational activities that help lead to the successful attainment of corporate goals.
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