2025 is fast approaching, and with it, a new set of financial challenges and opportunities. As businesses and organizations navigate an increasingly complex economic landscape, effective Planning, Budgeting, and Forecasting (PB&F) processes are more critical than ever.
To stay ahead of the curve, organizations must embrace modern tools and technologies that empower them to make informed decisions, adapt to change and drive growth. One of the industry leading tools in the Connected Planning space, Anaplan Planning, Budgeting and Forecasting offers organizations seamless financial budgeting and forecasting solutions to help drive strategic financial growth.
In this article, we'll discuss the factors to consider when Planning, Budgeting and Forecasting for the 2025 financial year, and explore how Anaplan Planning, Budgeting and Forecasting can help you achieve your goals.
What is Planning, Budgeting and Forecasting (PB&F)?
IBM shares that ‘Planning, Budgeting and Forecasting is typically a 3 step process for determining and mapping out an organization’s short- and long-term financial goals’. The Chief Financial Officer (CFO) of an organization and its Finance department typically oversees and manages the following 3 step process:
- Planning: According to IBM, the first step in the three step process is Planning which outlines a business's financial goals for the next 3 to 5 years. At this stage, your organization will establish a roadmap to achieving your organization’s financial aspirations.
- Budgeting: Budgeting provides a detailed, month-by-month breakdown of the plan, including Revenue, Expenses, Cash Flow Projections, and Debt Reduction strategies. Companies and organizations usually establish a fiscal year and create a corresponding budget for the year, which can be adjusted as needed to align with actual financial results.
- Forecasting: Forecasting involves analysing historical data and current market conditions to estimate future revenue. These forecasts are dynamic and can be adjusted as new information becomes available.
How Can Financial Planning, Budgeting and Forecasting (PB&F) Help Transform Your Organization’s Financial Future?
Setting Clear Financial Objectives
- Alignment with Business Strategy: Financial goals established through organization or business Planning, Budgeting and Forecasting processes should directly support the overall business or organizational strategy. This ensures that financial resources are allocated to initiatives that drive growth and value creation.
- Establishing Key Performance Indicators (KPIs): By setting specific, measurable, achievable, relevant, and time-bound (SMART) KPIs, your organization can track progress towards your financial objectives. These KPIs can include metrics such as Revenue Growth, Profit Margin, Return On Investment (ROI), and Debt Reduction.
Developing a Realistic Budget
- Thorough Analysis: A comprehensive analysis of historical data and future projections provides a solid foundation for budgeting. By understanding past performance and anticipating future trends, your organization can make informed decisions about resource allocation.
- Identifying Cost-Saving Opportunities and Revenue Growth Strategies: Continuous evaluation of expenses and revenue streams can uncover areas for improvement. With Planning, Budgeting and Forecasting, your organization will be able to implement cost-cutting measures and explore new revenue opportunities which can ultimately help optimise your financial performance.
- Effective Resource Allocation: Prioritising strategic initiatives and allocating resources accordingly is crucial. By focusing on high-impact projects, organizations can maximise their ROI with intuitive PB&F processes.
Improving Forecasting Accuracy
- Advanced Forecasting Techniques: Leveraging advanced forecasting techniques, such as Statistical Modelling and Machine Learning, can enhance the accuracy of your financial projections. These techniques can help identify patterns, trends, and potential risks enabling your organization and teams to tackle financial hiccups with data-driven insights.
- Scenario Planning: By considering various potential future scenarios, organizations can develop contingency plans and make more informed decisions. Scenario planning allows for a more nuanced understanding of the potential impact of different factors, such as economic fluctuations, industry disruptions, and regulatory changes.
- Regular Review and Adjustment: The business environment is constantly evolving. Financial forecasts should be regularly reviewed and adjusted to reflect changing conditions. By leveraging Planning, Budgeting and Forecasting solutions which help you stay agile and adapt to new information, your organization can maintain accurate and reliable forecasts to seamlessly guide your organization’s financial future.
By implementing these strategies, your organization can develop robust financial plans and budgets that drive sustainable growth and achieve long-term success.
Top 4 Factors to Consider When Planning, Budgeting and Forecasting for the Upcoming Year
In a 2023 article titled ‘16 Key Factors To Consider When Budgeting And Forecasting For The Upcoming Year’, 16 Forbes Finance Council members share factors that finance managers and CFOs must consider when Planning, Budgeting and Forecasting to ensure financial projections are ‘accurate, adaptable and capable of steering their organizations toward sustainable growth’.
Here are the top 4 factors highlighted by Forbes:
- Historical Performance: Paula Thielen shares that to effectively budget and forecast for the next year, managers must carefully examine the company's historical financial performance. By analysing past Revenue patterns, Cost Trends, and Overall Profitability, managers can identify seasonal variations, cyclical fluctuations, and specific trends that may influence future financial results. This valuable insight empowers managers to make informed decisions and develop accurate financial projections.
- Multidisciplinary Insights: Katherine Jackson states that to create robust budgets and forecasts, it's essential to involve multiple disciplines within the company and leverage their specific knowledge. While accounting teams play a crucial role, operational experts should also be engaged to leverage their unique knowledge and insights. By fostering collaboration between Finance and Operations, organizations can develop more accurate and effective financial plans.
- Marketing ROI: Ryan Carroll share that to optimise budgets and forecasts for the upcoming year, managers should analyse the Return On Investment (ROI) of past marketing efforts. By identifying the most and least effective marketing strategies, managers can make informed decisions about resource allocation. Focusing on high-ROI activities can help increase overall profitability and achieve better results.
- Unforeseen Circumstances: Jose Rodriguez states that managers must be mindful of potential unforeseen events and risks, such as natural disasters, political instability, supply chain disruptions, cybersecurity threats, and global pandemics. To mitigate these risks, managers should conduct scenario analysis and stress testing to identify potential vulnerabilities and develop contingency plans. By proactively addressing these risks, organizations can build resilience and adapt to changing circumstances.
Benefits of Anaplan Planning, Budgeting and Forecasting as a Platform
Here’s a quick reference list of benefits of Anaplan’s Planning, Budgeting and Forecasting platform:
- Reduced cycle times and PB&F efforts
- Process ownership which eliminates dependence on spreadsheets and other legacy IT
- Connected Plans across Finance, Sales, Operations and HR
- Increased accuracy and target achievement with driver-based models, real-time calculations, and automatic rollup across plans and reports
- Increased plan precision with broad collaboration and point-of-impact participation
- Seamlessly align your organization’s strategic plan, corporate plan, annual budget, and periodic forecast with both top-down and bottom-up methodologies
- Jumpstart time-to-implementation through pre-built accelerator apps for planning, budgeting, forecasting, consolidation, and reporting
Key Takeaways
Planning, Budgeting, and Forecasting (PB&F) is a three-step process involving planning, budgeting, and forecasting. Planning outlines long-term financial goals, budgeting details short-term plans and forecasting estimates future revenue.
By implementing effective PB&F strategies, organizations can set clear financial objectives, develop realistic budgets, and improve forecasting accuracy. Additionally, considering factors such as historical performance, multidisciplinary insights, marketing ROI, and unforeseen circumstances is essential for successful financial planning. Anaplan's PB&F platform can help streamline processes, increase accuracy, and enable data-driven decision-making.
Get in touch to get ahead of the new financial year. Leverage our best-in-class Planning, Budgeting and Forecasting solutions ahead of 2025.
