Every company needs to budget, it is a necessary part of success, yet can the price of implementing a budgeting system sometimes outweigh the savings you make? Stuart Warner discusses.
By Stuart Warner
Steve Player, North American Program Director for the Beyond Budgeting Round Table (BBRT) and CEO of The Player Group recently said "On average it budgeting takes 4 months and 20-30% of senior executive and financial managers' time."
The Hackett Group, a global strategic advisory and operations improvement consulting firm, found that organisations spend 25,000 man hours on budgeting and planning per $1 billion of revenue.
These statistics and my own experience in speaking to many accountants over the years have demonstrated the significant cost of budgeting to many organisations. If the actual time taken for budgeting was translated into a cost – it would be one of the largest annual expenses for an organisation. In recent economic times, most organisations have rationalised other large expenses. Why not take the same approach with budgeting? Indeed, many organisations, such as those within the BBRT, have eliminated budgeting altogether.
In "Making Budgeting Work in the Real World", we explore the barriers to effective budgeting and look at practical methods to make the process more efficient and potentially rationalise the overall cost of budgeting.
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