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Different approaches to budgeting mean that budget processes exist on a spectrum reflecting how rigorously those processes are developed and applied across organizations.
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Few finance processes are more maligned than the budgeting process. For years, research has shown that it steals time from other endeavors and produces little payout. And yet it persists. Why?
How Relevant is Your Budget?
The budget is a valuable tool
Somewhat Agree: 15%
Account reconciliations for Allianz’ cash pool were very manual and took too long to complete.
Allianz built a robotic program that automatically reconciles cash pool accounts without human intervention efforts. For the reconciliation, the robot connects to three cash pooling systems and compares and calculates a variety of data. The robotic program was coded to replicate exactly the steps that a human would take to perform this highly manual task to reconcile these accounts.
The Allianz robotic cash pooling program replaces the 6-8 hours of manual effort to reconcile the cash pool balances with an automated process that takes just 5 minutes. In addition to the reduction of time spent on this process, reconciliation are run more frequently, ensuring a higher quality of data.
Years of bad-mouthing have not dislodged the budget from its place of prominence across all categories of enterprises.
See what respondents had to say about flexibility in their budgets.
"Our budget is a snapshot of a forecast that we use as a reference line, but our forecast is moving continuously."
"Establish 'stretch' goals for the next fiscal year."
Putting AI to Work
MAKE IBP DECISIONS 100X FASTER
BNY Mellon’s broker-dealer service plays a pivotal role in the government clearance and tri-party repo markets, so resiliency is a top priority. The goal was to protect itself from tail events that could result in data loss or corruption.
BNY Mellon decided to create BDS 360, a third, separate system with which it could reconcile clients’ transactions and balances in its primary systems. BDS 360 is built on blockchain technology. The data structure’s immutable and traceable characteristics provide a separate and correct record of transactions and balances which BNY Mellon can use to cross-validate those recorded by its primary systems. BDS 360 does not replace BNY Mellon’s primary systems, but is used in conjunction with them.
BDS 360 is used to detect position breaks in the primary clearance and tri-party systems. In addition, it was a cost-effective and quick way to create an additional layer of protection.
the corporate world is responding to a main criticism:
"We knew we were successful in making decisions based on forecasts when people brought money back to the table to reallocate."
Minimal flexibility with the amount planned for any outlay
Support for Budgets is Clear
No budget; uses
Compensation is tied to budget numbers at various levels of the organization
It is the first forecast of the year, and only the division and organizational top and/or bottom-line numbers matter.
"People don’t know what they need at the time of the budget. They just know that they will need something, so they put in the request for the future. However, reserving that capital may starve other areas of the business. "
Bryan Lapidus, AFP Contributing Consultant, shares insights from the survey.
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See what respondents had to say about the value of budgets.
"Budget also sets the stage for five-year strategic planning."
Budgets now have discretion and flexibility built into them
The traditional budgeting process promotes sub-optimal behavior by locking managers into a rigid spending paradigm established at the time of the budget, rather than allowing them to do what is best for the company based on current situations.
"It is a Board requirement and also a statutory requirement."
Appendix: Benchmark with Detailed Survey Findings
Putting RPA to Work
Allianz Embraces Robotic Cash Pooling
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Making integrated business planning (IBP) work effectively almost always is a challenge.
Artificial intelligence can help organizations, and particularly their financial planning and analysis teams, make better IBP decisions as much as 100 times faster than before—even on an enterprise level. What separates artificial intelligence from traditional enterprise resource planning is that artificial intelligence platforms can include natural language processing and teach themselves to adjust in real time.
For example, a sales executive for a manufacturer might notice that a retail store is having trouble keeping a competitor’s product in stock. Most companies will have some kind of user interface screen where the executive can fill out a form, or require her to send an email through her company’s chain of command. artificial intelligence enables the executive to make a quick note and trust that the platform will “know” who else needs the data and get it to them instantly.
IS YOUR BUDGET RELEVANT?
Putting BLOCKCHAIN to Work BNY MELLON LEVERAGES TO PROTECT DATA