Best Practices for Preparing Your Budgets and Forecasts

Here we are again embracing another planning cycle. Budget and forecast preparation touches more people and causes more stress than almost any other business process.

Before we move forward, let’s define the difference between budget and forecast. The best practices apply to both activities.

Budget = The financial guide of a business made of dollarized goals that the business agrees it is going to meet.

Forecast = Prediction of the future that imparts real-time conditions as well as management judgment and is compared to the budget (variance).

Download our White Paper for 9 Steps to Prepare your Budgets and Forecasts:

  • Form a Coordination Team
  • Prepare a Communication Plan
  • Use the Pipeline Forecast as a Barometer for Revenue
  • Estimate direct costs to include labor, material, travel, and other direct costs (ODC)
  • Estimate indirect costs with the same rigor or more than direct costs
  • Look at Past Performance 
  • Keep Your Feet Firmly Planted in Reality 
  • Pick the Right Budgeting & Forecasting Tool 
  • Recognize That the Budget is a Living and Breathing Document