Planning, Budgeting and Forecasting (PBF) sits within a performance management framework.

The framework has three components. The other two components are Performance Reporting and Profitability and Cost Analysis.

Organisations should seamlessly link top-down strategic targets to financial and operational forecasts. Performance should be measured against those targets.

Planning

A top-down strategic plan defines:

  • the strategic aims of the enterprise
  • the high level activities required to achieve the goals.

Financial and operational planning should be brought closer together.

A company should create an integrated business planning process rather than discrete, function-based activities.

Enterprises require agility in planning to enable quicker and more accurate decisions across the organisation.

Budgeting

A budget enables the allocation of resource to be aligned to strategic goals and targets for the entire organisation.

Technology is creating budgeting tools that can deliver more self-service budgeting and forecasting responsibilities into line operations.

This allows the whole enterprise to see the core assumptions on which budgets and forecasts are based.

Forecasting

A forecast tracks the expected performance of the business. This allows:

  • timely decisions to be taken to address shortfalls against target
  • the business to maximise emerging opportunities.

Organisations need genuinely forward looking finance leaders to phase out traditional, rigid point-in-time planning and forecasting practices.

Finance leaders should help the business deploy effective rolling forecasting with moving targets that reflect real-time changes in external factors.

CFOs should be prepared to be resolute in championing a more enlightened and integrated approach to PBF. This will ensure they are involved in the broadest planning and strategy discussions within the business. 

About Jamie Lyon, lead author, ACCA

About Faye Chua, lead author, ACCA
About Faye Chua, lead author, ACCA
About Faye Chua, lead author, ACCA
About Faye Chua, lead author, ACCA
About Faye Chua, lead author, ACCA

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