Why your organization needs a dynamic, adaptable budget

Developing a budget is not a task reserved just for global corporations. Companies of every size must plan in advance how they will allocate financial, physical and human resources to achieve strategic goals and objectives. While the definition of budgeting is clear, the motivation for creating a budget can vary from company to company. Some companies look to help control spending while others try to more accurately predict metrics such as cash flow and profit into the future.

Whatever the motivation, there are central challenges to budgeting that all companies face: the fast pace of technological development and the ever-changing environment of global business. The dynamic environment makes it more difficult for businesses to create effective and precise budgets, but it is by no means impossible. To combat these challenges, there are a variety of best practices that can be implemented so that your business can achieve greater success and accuracy in its budgeting process.

Link to the corporate strategy

As previously mentioned, budgets are meant to determine how the company's resources will be allocated. Often times, the employees who create the budget are different from those who determine the overall objectives and future strategic movements of the company. For this reason, there is a lot of room for error when creating a budget by not allocating resources to areas that are planning to be expanded.

The link between these two functions of the business should be managed from the top down. Upper management should take the lead and communicate their plan for developing strategic goals. In turn, they need to receive information from the lower management about customers, competitors and relevant market changes. Without this information, upper management will not be able to design a realistic corporate strategy ...