Are you ready for the new fiscal year? Test yourself – 5 rules for successful budgeting

As the new fiscal year is upcoming for most companies, they are already beginning to form and approve their financial plans. This budgeting is very important for further control over the implementation of these plans.

In order to build a budgeting system, it is necessary to have a clear idea of what results the organization wants, when, and in what ways by implementing this process.

SCHNEIDER GROUP will help you answer some of the most important questions before you start the process.

Whether you implement the budgeting yourself or with the help of consultants is up to you to decide, but make sure you have the right answers for each of the questions.

Readiness Checklist

  1. Define the main strategic and tactical goals of the company. This will help you to plan activities based on certain indicators and build a quality control system to successfully achieve these. It is necessary to plan in advance and identify the need for financial resources, identify risks, sources of funding, and various development plans, and think about the optimization of processes and resources.
  2. Develop a competent financial structure of the enterprise and check the relevance of the organizational structure that serves as the basis for the financial structure.
  3. Define budgeting approaches, methods, and models. For this purpose, it is necessary to have a clear idea of the style of enterprise management, the basic principles of the company, the degree of process automation, the availability of sufficient staff, and their involvement in the processes.
  4. Diagnose the current state of the company, and develop rules, methods, and regulations for all services and subdivisions involved in the budgeting process, which will help the planning process and subsequent control.
  5. Define automation tools and ensure appropriate specialists are available.

Financial structure

Working out a financial structure is already partly a result of successfully introducing budgeting processes. If you are developing a financial structure independently, first identify the initiator of the budgeting procedure, under which it is necessary to build a hierarchy of financial responsibility centers and check the feasibility of the existing organizational structure.

In a classical approach to budgeting, it is best to build the very structure from top to bottom, determining which financial responsibility center (FRC) will become the top of the hierarchy. This is may be a profit center, cost center, investment center, or  financial accounting center.

Determine how you plan to allocate financial responsibility and what your financial structure will look like.

Budgeting Approaches

There are three main approaches to the budgeting process:

– Top-down

– Bottom-up

– Bottom-up/top-down (counter-planning)

Budgeting methods

Determine which method you think is most appropriate for your company.

Will you use the traditional method and plan on the basis of previous budgets, or will you start budgeting from scratch (Zero-Based Budgeting)? With the latter method, all expenses should be justified for each subsequent period so that a more realistic picture can be obtained.

The budget in the company can be formed for a certain period, after which the budgeting procedure is repeated. However, there is another option where there is no fixed end of the planning period, budgets are formed for an established time horizon.

Both classical and rolling budgeting – both options have their own peculiarities, advantages, and disadvantages. Contact SCHNEIDER GROUP’s Financial Management team for more detailed advice.

Some companies are not involved in budgeting at all and do not make a budget in the classical sense. Beyond Budgeting (translated into Russian “outside the budgeting principles”) is a whole philosophy of company management. It is a completely different adaptive management model, fine-tuned and based on certain principles. The essence of this model is that instead of a detailed budget, an action plan is prepared, and control points are tied not to the calendar, but to specific stages of project development. This approach focuses on targets. Control is achieved through autonomy and transparency.

How to build a competent budgeting process, how to regulate it, how to distribute responsibility and labor costs, which method, approach, and model to choose – all of this depends on many factors that should be considered in together, to avoid making mistakes and starting a labor-intensive budgeting procedure in emergency mode.


We hope that this information will be useful and you will be able to identify the points that require additional clarification, as well as assess the completeness of available resources. Specialists of SCHNEIDER GROUP specialists are ready to support you at any stage of the budgeting process or with other business questions.

Contact us

Daria Shelkova
Finance Director
+7 / 495 / 956 55 57
Ekaterina Lozhkova
Partner, Accounting, CFO Services, Moscow
+7 / 495 / 956 55 57
Angelina Anokhina
Financial Analyst
+7 / 495 / 956 55 57

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