A Better Approach to Budgeting for a Hybrid Workplace

Here you can download free budget templates for Google Sheets to organize your labor, material and other costs. Tools like Limelight provide a comprehensive financial view with granular insights to optimize spending. Instead, target inefficiencies and prioritize high-impact areas like online learning and mission-critical programs. Jake Nelson from EAB advises proactive strategies such as rightsizing operations and managing long-term cost growth rather than applying uniform cuts. This may require fewer desks but more huddle space for teams, along with whiteboards and tech screens. Learn more about optimizing office space design during our October 20 webinar.

Static Budget

Senior leaders set the budget based on overall objectives, and departments follow suit. By incorporating the guidance above, organizations can harness the power of hybrid project management to drive better results. This approach isn’t about reinventing project management, but about intelligently combining proven practices to suit the modern project landscape. As projects become more complex and fast-changing, having the flexibility of Agile with the stability of traditional methods is a strategic advantage. When implemented with solid strategies and best practices, it enables teams to be both disciplined and agile, maximizing the likelihood of project success in today’s dynamic business environment.

• A budget is a planning tool that reflects an organization’s programs, mission, and strategic plan.
• Effective budgeting in public finance requires not only the right model but also the application of sound techniques and strategies.
• FP&A platforms support tuition revenue modeling, grant forecasting, and endowment management, enabling institutions to integrate revenue projections with tuition planning.
• In general, top-down budgeting isn’t perfect and has some serious pitfalls to watch out for.

Advantages of the Blended Approach:

Essentially, you should first think about what functionalities are needed to reach your goals, and then think about headcount and resources. Unlike static annual budgets, rolling forecasts are continuously updated based on actual performance and market conditions. The hybrid approach provides flexibility and allows organizations to balance stability with adaptability, customer focus, and cost control. The general concept of the RCM model is that operating fund revenues are attributed to the academic divisions that generate them, primarily through tuition and Liability Accounts operating grants largely determined by student enrolment. Each academic unit contributes to a University Fund for institutional strategic priorities.

Best Practices for Budgeting in Public Finance

These departmental goals ultimately support the broader company aims, ensuring that each unit contributes to the organization’s success. Integrating Zero-Based Budgeting (ZBB) into your strategic plan is a transformative process that requires a meticulous approach. Unlike traditional budgeting methods, ZBB doesn’t start from previous years’ numbers; instead, top-down vs bottom-up budgeting it begins from a “zero base.” Every function within the organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one. This method ensures resource allocation is driven by strategy rather than historical precedent, fostering a culture of cost management and encouraging managers to find cost-effective ways to improve operations. In the realm of financial planning and analysis, the integration of traditional budgeting with zero-based budgeting (ZBB) methods presents a compelling synergy that can drive strategic planning to new heights.

• By blending approaches, businesses can create a tailored budgeting system that aligns with their unique environment and goals.
• Therefore, each department needs to set objectives based on its strategic and tactical planning.
• Traditional budgeting, often criticized for its incremental nature, tends to focus on past performance as a baseline, potentially perpetuating inefficiencies.
• This flexibility allows for more responsive financial planning, accommodating shifts in market dynamics or internal priorities.
• Universities that accept new budgeting ideas will do more than survive – they’ll excel.
• As a result, ZBB has had only modest application in schools, although the review of program activities makes ZBB particularly useful when overall spending must be reduced.

Effective Budgeting for Public Finance

• First-year domestic enrollments of 18-year-olds in four-year colleges saw a sharp 6% drop from fall 2023 to fall 2024.
• However, it can also be an incentive to do so at the expense of other units, which is not appropriate.
• The best budgeting approach provides a roadmap for reaching your objectives while managing resources effectively.
• Incremental budgeting is so called because all changes are made incrementally.

Whether you want to implement a top-down or bottom-up budgeting process, knowing the benefits and drawbacks of both is key. Basically, bottom-up budgeting begins at the lowest department level and moves up to senior management. Instead of budgeting for a fixed 12-month period, rolling forecasts extend beyond the current year, ensuring an up-to-date financial bookkeeping outlook. At the same time, bottom-up input allows employees to contribute their ideas and expertise to the innovation process. By giving employees a voice, leaders can tap into their creativity and encourage experimentation.

Business function

• To assess the optimal expected activity level, changes to the size of the sales force or price increases can be modeled.
• In addition, consider data integration capabilities so that information can be easily passed between different software tools used by different users.
• Many higher education institutions often rely on rigid annual budgets, making it difficult to adapt to changing financial conditions.
• Universities now embrace innovative budgeting approaches that provide better flexibility and accuracy due to financial pressures.

This combines the thoroughness of ZBB with the efficiency of traditional budgeting. First, you need to establish a top-down budget based on your strategic goals, market conditions, and historical data. Second, you need to communicate this top-down budget to your staff and stakeholders, and ask them to provide their bottom-up estimates and proposals. This will give you a detailed and realistic view of their needs and expectations. Third, you need to compare and reconcile the top-down and bottom-up budgets, and make adjustments as needed.

By creating a budget, a company can set targets for its revenue and expenses, track its performance, and make adjustments as needed to stay on track. Cube can help you automate and optimize your strategy—book a personalized demo today. For example, setting top-down targets and allowing bottom-up adjustments within those constraints can strike a balance between efficiency and detailed insights.