A budgeting model differs from traditional budgeting methods in several ways. Firstly, it changes the purpose of planning and budgeting from a command and control approach to a more strategic one. It focuses on forecasting what the company must do to deliver stable earnings per share (EPS) trends and then orders each business department to execute the plans that will add up to the targeted total. Secondly, it shifts the focus from financial precision to strategic success. The targeted outcomes are turned into strategic portfolio guidelines that drive the budgeting and adaptation process. Lastly, it encourages faster and more frequent planning. If budgets are inflexible and a crucial forecast can't be adjusted, it can cause stress over budget accuracy. Therefore, a budgeting model encourages more frequent adjustments to the budget.
Simplify the process of budget creation with our Budgeting Model template. This template includes ex...
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