The Implementation of Rolling Budget - Essay Example
It is worth pointing out that when implementing a rolling budget it does not essentially mean that essential changes have to be made with regards on how the company has been doing its budget. There are exceptions of course since it does not do a job for once in a year. I will advise that companies that will make a decision of stepping up to rolling budgets should take the advantages of changing their approach to handling this task. This will include them coming up with new ways of speeding up their budgeting process hence making it more useful.
To implement and ensure that rolling budgets are working, the management will have to be able to access and process information at a quicker rate. Ask any CFO (Chief Financial Officer) about spreadsheets and their effectiveness when it comes to budgeting, and they will inform you that they are not up to task. This is because they are not useful when it comes to implementing rolling forecasts for the budget. The other points have been that of multiple iterations making spreadsheets intricate to control. Securing of financial data under spreadsheets is also problematic and the consolidation of results is cumbersome hence making the risk of errors even higher.
Most financial executive do not like dealing with the burden of a rolling budget process. Thus, to integrate such a system, it will be called for the management to desert the annual budgets. Rolling budget will thus call for the embracing of the usage of key performance indicators (KPI). This has to be in relation to the financial metrics. The financial data entry persons will have to master the links between static, excel based B and P and the full dynamic rolling budgets. This will call for usage of these new software's which can monitor while directing budget adjustments. It will be useful in reducing surprises come the end of the financial year. The software is part of the decentralization of the budget rolling process since it moves responsibilities to the front line managers. With that process, each and every dime spent in an organization can be accounted for under the rolling budget.