Magazine article Management Today

MT Learning Curve: Budgeting

Magazine article Management Today

MT Learning Curve: Budgeting

Article excerpt

What is it? Alec Douglas-Home said he used matchsticks to explain economics to himself when he was PM in the 1960s. But now we have powerful computers, spreadsheets and 'business intelligence'. In theory, budgets tell you where you stand financially, and where you might be heading. But budgets are, in a sense, fiction. They describe what you hope might happen, while including a bit of guesswork and even wishful thinking. 'Take last year's number and add 10%' is often the rule You'll have time later to explain why you missed the target.

Where did it come from? In old French, a bougette was a purse or small bag. It's a reminder that there is something quaint, medieval even, about that moment when the Chancellor of the Exchequer holds up the red box containing the budget speech. Formalised accounting for business took a great leap forward in the 15th century when a Franciscan monk, Luca Pacioli, perfected double entry book-keeping. If you really hate the budgeting process, blame him. …

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