Create less detailed budgets that are distinct from the annual budget

Description

These subsets of the core budget allows for more agile financial planning, allowing departments to cater to short-term, emerging needs without overhauling the annual budget. These stripped-down budgets, also known as rolling or project budgets, usually span for quarters or specific project durations, providing a flexible and responsive approach to financial planning.

Example Use Case

Scenario: A manufacturing company uses CPM software for its financial planning. The company comprehensively plans its annual budget but also has temporary projects that require financial allocation outside of the annual budget.

Solution: The company uses the planning tool's feature to create less detailed budgets for each of its projects. These budgets are separate from the annual budget, allowing the company to flexibly allocate funds and resources without disturbing the overall financial plan. For instance, a sudden project for a new product's small-scale manufacturing can have its distinct budget, separately referenced and tracked, without modifying the company's entire annual budget.

Considerations

If this will be needed, check with the vendor that they support created a “mini-budget” in the system that is a part of a broader budget. This usually involves selecting certain dimensions, attributes, and periods which are placed into a model for this single purpose. More focused modeling tools are good at this, while pure play planning tools might not be. This is because pure planning tools are purpose built for a type of budgeting, whereas a modeling tool is a flexible platform with no iron clad workflows.

These less detailed budgets should nicely feed into the main annual budget for overall financial tracking. This is helpful if, in the event these are project-based, the budgets come and go throughout the year. It is valuable to have them roll into a master budget without any manual work.

Questions to ask a Vendor

Ease of Creation: How user-friendly is the system in creating less detailed budgets that are separate from the annual budget?

Compatibility: How well do these subsidiary budgets integrate with the main annual budget?

Autonomy: Can different departments independently create and manage their budgets?