The annual budgeting process is being criticized as obsolete soon after it is published, prone to gamesmanship, cumbersome to consolidate cost center spreadsheets, not being volume sensitive, and disconnected from the strategy. This course describes how to resolve these deficiencies through driver based expense projections also useful for decision analysis.
Course ID: DBB
Predictive Accounting: Driver-Based Based Budgeting and Rolling Financial Forecasts
- Upon completion of this course participants will be able to:
- Recognize the deficiencies with the traditional annual budget
- Apply unit-level consumption rates with forecasts to project operational expenses
- Define how to include strategic and risk mitigation projects in expense projections
- Apply “predictive accounting” for driver- rolling financial forecasts, what-if analysis, and outsourcing decisions
- Define how to shift from bottom-up cost center consolidations to top down modeling.
- Problems with traditional annual budgeting
- Projecting demand volume-based operational expenses
- Strategic initiatives for strategy execution
- Risk mitigation spending for risk management
- Capital spending plans
- Shifting to frequent interval rolling financial forecasts
- Applying probabilistic forecasts, including for what-if scenario analysis