Thursday 28 Mar 2024
By
main news image

KUALA LUMPUR (Nov 17): Chief financial officers (CFOs) will focus on improving the flexibility of budgeting and forecasting in 2022, according to a poll.

Technology research and consulting firm Gartner Inc in a statement Tuesday (Nov 16) said a September 2021 survey of 251 CFOs and other finance leaders revealed that 72% of CFOs will focus on improving the flexibility of budgeting and forecasting.

Gartner Finance practice research director Faith Vakil said the pandemic exposed budgeting and forecasting processes that were not able to handle rapid and unpredictable changes in operating conditions.

“Furthermore, it showed that there can be opportunity in disruption and the benefits of flexibility in how an organization uses money throughout a year,” said Vakil.

She said the annual budget plan is a convenient starting point but the way an organization uses money throughout the year is far from static.

“Disruption inevitably forces deviation from the plan, and finance leaders typically look for quick wins: cutting selling, general and administrative expenses (SG&A), and/or moving resources around within a business unit to avoid more difficult trade-offs between business units,” said Vakil.

Gartner said the problem with this approach is that the quick wins dry up sooner or later.

It said this forces finance leaders to make the more difficult trade-offs anyway, often at the most challenging moments for a business.

Instead, the firm said it is better to embed flexibility into budgeting and forecasting in a more sustainable way that encourages a total company mindset and can foster innovation and alignment to changing priorities.

“The key change in mindset that finance leaders must adopt is to make tradeoffs between business units early and often rather than trying to stick to an annual plan until the last minute.

“This approach encourages collaboration between business units, it embraces innovation as necessary and normal, and improves funding alignment to changing priorities,” said Vakil.

      Print
      Text Size
      Share