Robert Kugel's Analyst Perspectives

Rethinking Budgeting for 2013

Posted by Robert Kugel on Sep 7, 2012 11:16:54 AM

Budget season is about to open at most companies that operate on a calendar year, so this is probably as good a time as any to rethink the process. Almost all companies will undertake the construction of a budget this year the same way they did it last year, despite widespread complaints that it is a monumental waste of time. One major reason why budgeting never changes is that it isn’t important enough to be worth serious rethinking. Another reason is that too many vested interests are aligned with the status quo, especially because compensation is tied to budgets. Despite this, I think companies can do better, evolving the process from a finance-centric activity to one that serves the needs of broader business interests as well.

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Topics: Planning, forecasting, Operational Performance Management (OPM), Reporting, Budgeting, Controller, Accounting, Business Performance Management (BPM), CFO, Compensation, Financial Performance Management (FPM), Sales Performance Management (SPM), cash management, FPM, Integrated Business Planning, treasury

Managing Mountains of Cash Is Harder than It Sounds

Posted by Robert Kugel on Nov 7, 2011 6:56:47 AM

At first thought, it seems as if having a mountain of cash to manage is a problem most companies would like to have, but it’s a real problem nevertheless. To be sure, the large majority of companies are able to deal with their cash and short-term and longer-term monetary investments because the amounts are small enough to be manageable. Indeed, many companies, especially smaller ones, face the opposite problem and spend more time focused on their uncertain funding requirements. Still, over the past decade highly profitable companies have been generating more cash than they need to fund expanding operations and capital spending requirements (Apple and Oracle are two examples), and now they have to manage it. Larger companies may have portfolios in the tens of millions to billions of dollars in multiple currencies in multiple jurisdictions, so there’s a lot at stake.

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Topics: Performance Management, credit, maturities, Tax, Business Analytics, Business Performance Management (BPM), Financial Performance Management (FPM), Risk, cash management, GAAP, investment, treasury