CFOs are Not Happy with Budget Process
A new report proved that many CFOs, and financial leaders think approach to annual budgeting of organizations should be improved, only 37 percent think it is valuable for the organization.
According to the American Productivity and Quality Center and Grant Thornton LLP, the 25 percent financial leaders and CFO said that the budget process is valuable to some extent, but the annual budget rapidly turns into outdated. Moreover, 70 percent finance leaders and CFOs admitted that no doubt annual budgeting process is very useful, but no one likes to use the budget as a perfect baseline measure.
May be the finance leaders are not satisfied due to the fact that almost 70 percent of finance leaders are using the ‘last year plus percentage method’ for budget process, which is based on previous year figure plus percentage that is based on either inflation or planned business growth. But this technique is not so much useful due to the fast moving business risks.
Graham Tasman Grant Thornton Business Advisory Services principal said in his statement that the budget planning activities are very important to make performance more agile of companies. If more and more finance supplies are offered to regulatory compliance, then many companies fails to supplement the annual budgeting process to these planning activities.
About 62 percent of finance leader said that their staff is obscured in fundamental financial management duties to get better FP&A. and 40 percent said that their current financial analysis, planning and potential are successful. Moreover, 14 percent rated their company’s strategy to aptitude recruitment and expansion is unsuccessful and 16 percent said their budget for talent growth is insufficient.
The report also exposed that the companies are adopting new technology very slowly. Because finance leaders mainly apply data to report on what have taken place in the earlier period. About 57 percent report contain fundamental cause and effect analysis, while 60 percent have uncomplicated aggregation of losses and experiences. Only 24 percent report contain useful predictive investigative methods.