State of Corporate Budget series (part seven)

Who’s Responsible for Keeping Your Budget on Track?

By: The Center Team

Previous article in this series: In the Dark About Discretionary Spend

 

In our State of Corporate Budget 2018 survey, we asked nearly 250 business leaders who  owns keeping the budget on track.

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Finance Can’t Fix Everything

40% of the companies we surveyed reported that if they get off track, the finance team steps in to cut or stop spending. However, this group was actually more likely to go over budget at least sometimes (73% vs. 64% overall), indicating that relying too heavily on a single department can be problematic.

Distributed Ownership = Diminished Visibility

Just over 20% of the companies we surveyed distribute budget ownership to department heads, who use a combination of manual and online processes to track progress. Not surprisingly, the owners of these companies were far less likely to know how much goes toward discretionary spend (45% had “no idea,” compared to 25% overall). And, for this group, the lack of 360-degree visibility tops the list as the most common budget complaint (38%).

Center Team Take

Because performance-management goals—and thus compensation—are tied to budgets, there seems to be an abundance of gamesmanship among budget owners too. This includes inflating spending and minimizing departmental revenue goals to provide a cushion as the year progresses. Budgets can also be influenced by pet projects or personal relationships rather than overall corporate strategy.

        Jeff Drummond, VP of Finance and Accounting
 
lineTO THE POINT

Budgeting should be a team effort, but in practice often isn’t.  

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Keep reading: The Blueprint for Effective Budgeting
 

Other Articles in This Series

What Grade Would You Give Your Budget Process?

Over Budget? You're Not Alone.

Is Your Budget Bar Too Low?

Are Manual Processes Bogging You Down?

The Problem with Set It and Forget It

In the Dark About Discretionary Spend?

 

 

Budgets can be influenced by pet projects or personal relationships inside the company rather than overall corporate strategy.