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    Home BlogThis is how continuous planning can improve your business budgeting

    This is how continuous planning can improve your business budgeting

    April 17, 2020
    Stig Roar Sandvik
    Stig Roar Sandvik
    CEO
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    With a business environment evolving at a rapid pace with digitalization, the weaknesses of traditional budgeting are becoming increasingly apparent. Here you can read about how rolling forecasts – or continuous planning – can make it easier for your business to keep pace with developments.

     

    Stig Roar Sandvik is Director of Product and Business Development at Profitbase. He explains that the companies who contact Profitbase are those who have understood the value of continuous planning.

    – Our customers have understood something very basic about the time we live in, namely that it is complex and often presents great challenges for those who follow the old way of thinking about budgeting.

    According to Stig Roar, the so-called “static model”, where one meets once or twice a year to plan the budget, can in the worst case create more headaches than predictability.

    – We are seeing it right now, that some companies are better equipped to cope with the big changes that have happened only in the last weeks during the corona situation, he says.

     

    Continuous planning – what is it all about?

    Continuous planning is often referred to as “active planning”. And the essence is that – in a reality characterized by frequent changes, you need to take greater account of different scenarios, such as in these times now with corona. How will it affect us if the employer’s contribution is reduced by 4%? How are we affected by potential layoffs?

    – It is a difficult situation, which of course is also difficult to calculate the outcome of, and this is what we help simplify. The calculations must be compiled in a way that takes into account everything that will or can happen in the coming weeks and months, says Stig Roar. It’s not a coincidence that the chance of a successful restructure is four times as high in companies that use continuous planning procedures, he adds.

    Forecast-løsning fra Profitbase

    Is Excel enough?

    – Adaptability is the alpha and omega. We cheer for everyone who in the current climate feels the pressures of the situation and who must make tough and creative decisions in order to survive.

    Stig Roar says that the changing circumstances lately mean that companies may have to ask themselves new questions about operations and costs: – Is it adequate to do all our calculations in Excel? Do our budgets give a good enough picture of the day-to-day operations? Do we catch the changes soon enough? How do we ensure transparency about which items on the budget mean what, and for whom?

    – We often see a department in the company that makes plans that do not necessarily take into account other departments. For example, there may be budget decisions made in the production department – without having sufficient insight into what the sales department is doing, he says.

     

    Together we stand stronger

    When the budget discussion is something that happens once a year, the discussion often becomes very political. It becomes more characterized by negotiations and can be tied more to personal conditions, such as who gets this and that bonus.

    – The ultimate goal should be to turn the budgeting process into a process that everyone can have some overview of, and to which everyone can contribute. That it is not just something only one person has an overview of, and that it is not just a discussion about numbers. How about having this discussion once a month? Maybe even every other week? says Stig Roar.

     

    He goes on to say that with a more frequent and clearer discussion about the various items on the budgets, a more democratic workplace is achieved – precisely because all the different parts of the business get a better understanding of their role and their contributions. Such a holistic or comprehensive approach will in turn lead to greater predictability for both management and employees.

     

    Can you free up time for new tasks?

    When there are many uncertainties, it is easy to become overwhelmed. Then it can also be more difficult to think clearly about where the road should go.

    Allowing good tools to deal with budgetary uncertainties can free up time to think about the solutions required for the time to come. Whether you run a small, medium or large business, it is in the daily activities that innovative work occurs.

    – This really sums up everything we work to offer our customers: – room to think less about the numbers, and more about the values that are created – and those who actually create them, concludes Stig Roar.

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