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The Financial Times Essential Guide to Budgeting and Forecasting by Nigel Wyatt

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7

Back to basics: living within your means and delivering VFM

There are some simple principles to start off managing your budget. In this chapter we provide some simple models to keep you on the straight and narrow.

Budget feedback mechanism

Budgetary control systems need to deliver effective feedback. This feedback tells budget holders what is going on and alerts them to problems. The sooner a problem can be identified the better. Ideally systems will alert budget holders to problems in advance. We should aim to design leading indicators (giving advanced warning) rather than lagging indicators (finding out after the event). Managers should also plan for likely adverse outcomes and have back-up remedial actions.

For example, when you become ...

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