Upfront: Focus on Control, Cost Management Falls Short

Companies that focus on planning, budgeting and forecasting as a business strategy are higher performers in all areas than those that focus on cost accounting, control and cost management, as evidenced by a recent benchmarking survey by APQC (American Productivity Quality Center) and IBM Global Business Services.

The study found that high-performing businesses spend $0.29 per $1,000 in revenue on the process of planning, budgeting and forecasting; $0.25 per $1,000 in revenue on cost accounting, control and cost management; and $0.24 per $1,000 on evaluating and managing financial performance.

At the other end of the spectrum, low-performing companies spend their time and money very differently; they are focused on cost accounting and control. The largest spend within low performers surveyed was $2.47 per $1,000 in revenue in cost accounting and control, followed by $2.08 per $1,000 revenue on evaluating and managing financial performance process. Additionally, $1.81 per $1,000 of revenue went for planning, budgeting and forecasting.

The study also found a big gap between high and low performers in the number of days they need to complete the annual budgeting cycle. High-performing finance organizations complete forecasting cycles three times faster than low performers do. It takes low-performing companies 90 days to complete the annual budget, compared with 30 days for high-performing businesses.