gabrielmoreira Budgeting & Forecasting
Create and manage effective budgets and financial forecasts.
Budgeting Approaches
| Approach | Method | Best For |
|---|---|---|
| Incremental | Last year + X% | Stable organizations |
| Zero-based | Build from scratch each period | Cost optimization |
| Activity-based | Cost per unit of activity | Manufacturing, services |
| Rolling | Continuous 12-month outlook | Fast-changing environments |
Zero-Based Budgeting Steps
- Identify all activities and their costs
- Evaluate each: does it create value?
- Rank by priority/cost ratio
- Fund top priorities within budget constraints
- Cut or optimize low-value activities
Forecasting
Rolling Forecast Model
# Structure
- Historical data (12-24 months)
- Current pipeline and commitments
- Leading indicators (traffic, leads, bookings)
- Economic assumptions
- Scenario overlays (best/base/worst)
Variance Analysis
| Variance | Cause | Action |
|---|---|---|
| Revenue ↑ | Volume or price increase | Sustain driver or reinvest |
| Revenue ↓ | Volume or price drop | Investigate root cause |
| Cost ↑ | Variable or fixed increase | Optimize or renegotiate |
| Cost ↓ | Efficiency or lower demand | Validate sustainability |
Scenario Planning
- Base case: Most likely outcome
- Upside: +20% revenue, what would we invest in?
- Downside: -20% revenue, what would we cut?
- Each scenario has specific triggers and action plans
- Review scenarios monthly against actuals