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How do you approach uncertainty in your 2017 financial plan? Consider spirited counter-measures to keep budgeting & forecasting relevant as conditions change.
With the real possibility of rising interest rates next year – the power of negative thinking in 2017 is something to be considered. Thanks to Al Hannenberg, CEO of Informative People Inc., for this great contribution. Please contact [email protected] if you want to add to the FP&A conversation on piercethefog.com.
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When a business makes their budget, they typically use either an incremental budget or a zero based budget. Incremental budgets are used by the government (theirs is called a baseline budget) and are not very effective at controlling costs. Zero based budgets, on the other hand, encourage businesses and managers to closely review business plans and forecasts each year and arrive at a budget that meets those goals. If you're interested in learning more about the advantages of zero based budgeting, we recently posted an article on our budgeting blog.
The practice of maintaining budgets for the same number of future periods, revising those budgets as each period is completed adding a new budget each period is called: A.
