A Budget Is Only Useful If It Argues With the Ledger

• Budgets are held per department and per period with scenarios, and variance is computed against the real ledger rather than against a pasted export.

• Budgets, forecasts and variance analysis work off the same ledger the statements come from, so plan and actual cannot disagree about what actually happened.

• Period-over-period movements are explained inside the close, so the question an auditor asks in March is answered in the month it happened.

Budgets are held per department and per period, with scenarios, and variance is computed against posted activity each time you look. A correction in week three changes the variance in week three, not in the next reporting cycle.

The movements that need explaining are explained inside the close, in the month they happened, and the period’s narrative — the cover letter, the management commentary — is written on the pack beside the numbers it describes rather than in a deck. That is a small thing that pays off a year later, when somebody asks why Q2 marketing was over and the answer is already written down next to it.

• Cash runway is derived from posted activity and committed spend, so the number in the board pack is the number in the books.

Runway derived from posted activity and committed spend, rather than from a spreadsheet that started as a snapshot and drifted. When the board asks how many months there are, the number and the books cannot disagree, because there is only one of them.