At one of our recent Pabasso peer-to-peer meetings, the group of MDs & CEOs decided they would like to have a round table discussion on the annual budgeting process - not the Rachel Reeves type but their own organisation's budgets!

The Potency of Peer Support!

Not an event in the year that many business leaders look forward to, but a vital part of an MD/CEO's role in leading the business for the next financial year and beyond.

Whatever help you get from your accountancy team, the MD/CEO is the one who should be driving the budgeting process and owning the numbers, and the plan that supports those numbers for the next financial year.

What is budgeting best practice? How do we all do it? What methodology do we all use? When does budgeting commence in relation to the start of the new financial year? What is the cash requirement to support the budget? What contingencies have you considered +/- etc. -  but a few of the challenges we discussed.

To inform the discussion beyond our own experiences I felt it might be useful to invite an experienced accountant to participate in this discussion and we were lucky enough to have Daniella Wainwright of Wainwright Consulting join us and indeed host us at our friends Wizu's iconic Leeming building in Leeds.

Dani is a very experienced FD who is now working as and running a boutique consultancy providing fractional FD/CFO services to growing and ambitious businesses across Yorkshire and the North East.

Her input was very useful and she presented us with a paper entitled ‘The Budgeting Process’ which covered some of the more common budgeting methodologies in use today:

• Incremental: Last year’s actuals + / - appropriate percentage
• Activity Based: Top-down method based on desired outputs
• Value Proposition: Considers what each cost does to benefit the customer, staff or stakeholders
• Zero Base: No budget automatically assigned/assumed

I have a copy of this presentation and Dani has agreed for me to make it available to anyone interested in receiving a copy, just drop me a message with your email address and I will send you a copy.

We also discussed the relationship between budgets, forecasts and targets and the option of rebudgeting at some time in the financial year if required.

All in all a very valuable discussion. What did we conclude?

• There is no one-size-fits-all methodology for budgeting
• It's a vital if not time-consuming process
• The latest you should start your budgeting process is 3 months before the year-end

At Pabasso we empower MDs & CEOs of SMEs for greater success. We provide comprehensive business support for MDs and CEOs through monthly group meetings and monthly 121 mentoring and coaching sessions to address the challenges of running a small to mid-sized enterprise (SME).

We are always looking for MDs & CEOs of established SMEs to join us as well as experienced business leaders with time on their hands to Chair more Pabasso - Peer Advisory Boards, currently only in Yorkshire and the North East. If you would like to find out more about how we help MDs & CEOs on their journeys please drop us a note or give us a call to find out more. rad@pabasso.com 01937- 581970

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