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Balance Sheets Checklists

The Objectives of Corporate Planning and Budgeting

Checklist Description

This checklist outlines the objectives of an effective system of budgeting and corporate planning in order for a company to maximize its potential within the marketplace.

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Finance departments are always under pressure, the more so in a climate of economic uncertainty. Increasing accountability and shorter budgeting cycles result in organizations seeking new ways to manage the budgeting process and developing solutions that meet the exact needs of their clients as well as match their own business attributes.

Corporate planning is defined as the process of drawing up detailed action plans in order to achieve the aims and objectives of an organization. It takes into account organizational resources and the environment within which a company operates.

Corporate planning is the responsibility of senior management, and there should be a structured approach to achieving objectives and implementing corporate strategy. Good corporate planning and budgeting should reduce the cost of the overall budgeting process and the time taken to complete the budgeting cycle, as well as improve both data integrity and security. Corporate planning should also take into account corporate or enterprise objectives, structures, and functions. Results and performance solutions are built into a corporate business structure, to record actual business data based on resulting value, capital worth, and performance costs.

E-budgeting solutions are becoming more popular as they completely automate the development of a company’s budget and forecast. Web-based enterprise budgeting systems are centrally administered and provide flexible tools for budget planners, allowing constant monitoring, updates, and modeling. They also free up time in the finance department for strategic decision-making rather than paper-pushing.

Budgeting is about responsible money management. The overriding purpose of a budget is to stop overspending, which can be done by monitoring cash flow, and to prevent any existing or future debt from becoming an unmanageable mess. Good budgeting ensures that a company’s cash flow is monitored and assessed regularly, that funds are available for payments out, and expansion, and that the business does not spend beyond its capabilities.

Companies should assess whether their spending is growing and why, and identify measures to reduce it. It is vital to ensure that the budget is in alignment with corporate objectives, and it is useful to measure budgets by activity and/or project, and not just by department.

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  • Strong financial planning ensures that a company can keep track of revenues, expenditure, cash flows, capital, and investments, as well as make accurate financial forecasts.

  • Good budgeting calculates capital needed for business organization, human resources, facilities and equipment, and management strategy.

  • Corporate planning should assess, monitor, and prioritize liabilities, focus on profitable opportunities, and involve regular reassessment of the company’s business practices. It also helps to locate all of a company’s concerns, such as money, products, employees, systems, and customers, under one roof.

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  • Rigid corporate and financial planning may be inappropriate for some smaller firms, which may benefit from a more fluid approach.

  • Larger corporations risk becoming fixed in their outlook by adhering strictly to planning—it’s important to maintain a flexible approach and reassess plans if necessary.

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Action Checklist

  • Define the goals and communicate a clear company-wide strategy.

  • Customize plans and models to fit the business needs.

  • Spend less time on processes and more on analysis.

  • Enable participation by everyone involved in the company.

  • Streamline workflow management.

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Dos and Don’ts


  • Ensure that the traditional financial view generated by your financial system reflects a robust cost model.

  • Develop a portfolio inventory listing all existing applications and systems.

  • Identify the business “owner” of each application or project.


  • Don’t forget to review and revise budgets on a regular basis.

  • Don’t view corporate plans as fixed eternally.

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Further reading


  • Ross, Stephen A., Randolph W. Westerfield, Jeffrey F. Jaffe, and Bradford D. Jordan. Corporate Finance: Core Principles and Applications. 3rd ed. New York: McGraw-Hill, 2010.
  • Shim, Jae K., Joel G. Siegel, and Allison I. Shim. Budgeting Basics and Beyond. 4th ed. Wiley Corporate F&A Series. Hoboken, NJ: Wiley, 2011.

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