Thursday, March 19, 2009

Planning Your Assumptions

Probably every budget ever created was out of date before it was even completed, so the smarter finance innovators have adopted (or are at least moving towards) a continuous planning cycle, where real-time planning occurs in response to real-world events and new information, whether actual past results or better assumptions about the future.

So it's a welcome development that CFO Magazine is continuing its excellent webcast series with a CFO Master Class entitled The Evolution from Budgeting to Continuous Planning and Forecasting. In these turbulent economic times, dynamic planning seems like the only way to go.

With any budget, it's the assumptions you make that have the most impact on the accuracy and usefulness of your projections. That's why in my previous post I emphasized the critical nature of near real-time access to the data in your financial systems - not just to report against historical numbers, but to be able to combine that data in a timely manner with operational data to see how current trends and external factors affect profitability - and so allow you make better assumptions, and ultimately, plan more effectively and accurately.


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