Budget-Building Tips During Economic Uncertainty

Budget-Building Tips

Budget planning is par for the course for any company, but 2023 presents unique challenges. Rising interest rates, inflation and the threat of a full-blown recession means that businesses need to switch their priorities for the coming year.

So, we’ve compiled a few tips to ensure that your budget is prepared to weather economic turbulence for the year to come.

Analyze the Right Information

Annual budgets are typically built once the first three quarters of the month are closed. This gives finance teams nine months of actuals to work with, while assumptions for the next year can also be factored in.

It can be useful to break down the budget by revenues, headcounts and operating expenses — consulting sales teams, HR departments and all stakeholders, respectively. 

Negotiate Effectively

Finance teams are responsible for keeping budgets realistic, so they will often need to deal with pushback from budget owners across all company departments. 

Rather than getting mixed up with office politics, it’s important for the finance team to remain neutral, document each departments’ asks and goals for the year, and to challenge budget owners to come up with alternative solutions to reaching their goals if certain proposals are not financially feasible.

Present Data in Engaging Ways

Data is the FP&A team’s best friend when it comes to negotiating with budget owners and seeking approval from the board. 

When negotiating with budget owners, showing them hard data and explaining the accounting process can be effective in helping them understand how much revenue you’re actually working with.

As for seeking board approval, you’ll want to present data in an engaging way that allows you to zoom in and out, showing both the big picture and the day-to-day.

For a deeper dive into building a budget that will allow you to save costs and prepare for the unknown, download our Guide to Building a Yearly Budget During Economic Uncertainty.

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