Budget Management Best Practice 3 – Monthly Budget Presentations

Budget performance is important to the successful management of any organization and to the personal performance of individual executives and managers. Consequently, budget reviews occur on a monthly or quarterly basis; allowing enough time to pass for meaningful trends to develop but not so much time that corrective action could not be taken so to ensure a business group remains on budget. In addition to being aware of line item budget variances, trends, and associated drivers, managers must effectively communicate this knowledge if appropriate organizational understanding and effective actions are to be taken. Thus, all business leaders should be prepared to make a budget presentation to their responsible seniors on a monthly basis.

Characteristics of Effective Budget Presentations

Like any quality presentation, effective monthly budget presentations should be clear and concise; conveying meaningful data in a manner that informs and inspires action without inundating the receiver with superfluous data. Similarly, the presentation should not be difficult to construct on a routine basis so to minimize the administrative burden on the presenting manager and his or her organization. The following characteristics are common among best practice monthly budget presentations:

• A standardized presentation template is used
• An executive summary presents key information and action recommendations
• Individual line item summaries provide graphic representations of actuals versus planned; including performance trends over time
• Where exceptional trends or variances exist, commentary is provided as to the nature and cause of the deviation as well as those actions taken and recommended to take advantage of or correct the condition
• Focus on only those exceptional trends and variances; omitting significant discussion about on-track or minor variances in performance
• Junior level managers present monthly budget presentations to seniors ahead of the senior manager’s budget presentation to higher level management

Final Thought…

It is often a poor use of time to report on inconsequential budget line items regardless of their trend or variance. Such revenue or expenditure items typically represent less than one or a few percent of the total budget. These items may be worth reporting in the month in which they are eliminated for budget cutbacks; only to the extent that their elimination significantly contributes to the overall budget reduction being sought.