Budgeting Basics and Beyond

5.8. Participation

Profit planning involves effort and input by managers in sales, production, distribution, research and development, service, engineering, finance, traffic, and general business.

Line managers are concerned with operating and executing plans. Staff managers assist others in an advisory capacity. In either case, the manager must be able to change and try new things.

Financial people should spend time with operating personnel to familiarize themselves with operations, problems, and requirements. Managers should encourage financial personnel to discuss with them the nature and characteristics of their department's or responsibility unit's operations. In this way, the accountant or financial executive can prepare meaningful budget information and performance reports that can be used by nonfinancial managers.

Managers should insist on getting reports, schedules, and forms that are useful. Otherwise, the information may not be suitable or relevant and will be discarded.

Nonfinancial managers should communicate clearly to financial managers the type and nature of information they need. Otherwise, time and money will be wasted on useless information for managers. As a result, the managers may waste time accumulating accounting numbers themselves.