The Budget Season Playbook

Finalise the budget assumptions pack, update the chart of accounts, and prepare templates. Review last year's process: what worked, what caused delays? Set clear deadlines and communicate the timeline to all budget owners.

Distribute templates to department heads. Revenue teams build their sales plan. Hiring managers submit headcount requests. Operations teams estimate project costs. The FP&A team runs weekly check-ins to answer questions and resolve blockers.

Consolidate all inputs into a single model. Run sanity checks: Does total headcount cost reconcile to the hiring plan? Is revenue growth consistent with pipeline assumptions? Present the first draft to the CFO and leadership team for feedback.

Incorporate feedback, adjust assumptions, and produce the final version. Present to the board for approval. Distribute the approved budget to department heads and set up the budget vs actuals reporting framework.

Start with the economic and market assumptions that affect everyone: inflation rate (the Bank of England publishes forecasts quarterly), exchange rates for multi-currency businesses, interest rates for debt servicing, and industry growth rate. For UK businesses, include Corporation Tax rate (currently 25% for profits over £250,000) and employer National Insurance rate (currently 13.8% above the secondary threshold of £9,100).

Define the top-down revenue target or growth rate. Be explicit about whether this is a stretch target or a base case. Specify pricing assumptions: are prices increasing? Is there a new product launch? What is the assumed churn or renewal rate? Revenue assumptions should come from the commercial team, validated by FP&A.

Set standard rates for common cost items: salary increase budget (e.g., 4% merit pool), recruitment fee assumptions (typically 15-20% of salary for permanent roles in the UK), travel per-diem rates, software licence cost per head. Providing these centrally prevents every department from inventing their own numbers.

Each template should have three sections: instructions (one page maximum), input cells (clearly highlighted, with validation), and output summary (auto-calculated, showing the department's total budget). Pre-populate templates with prior year actuals and current year forecast so budget owners have a baseline. Highlight cells that need input — do not make people guess where to type.

If you are using spreadsheets, send each department head their own file with only their data visible. Version-name files clearly: "Engineering_Budget_FY2627_v1.xlsx". If you are using FP&A software like Grove FP, assign each budget owner to their department with appropriate permissions. They see only their slice of the model and cannot accidentally modify other departments' data.

Set a clear deadline (typically 2-3 weeks) and send reminders at the halfway point and three days before the deadline. Track submissions on a simple status board: Not Started, In Progress, Submitted, Reviewed. Follow up personally with anyone who has not started by the halfway point — early intervention prevents last-minute scrambles.

Work through these checks systematically for each submission. Does the headcount plan reconcile to the salary budget? (Common error: departments budget for roles but forget employer NI and pension.) Do revenue assumptions match between Sales and Marketing? Are inter-department charges consistent on both sides? Do capital expenditure requests have proper justification?

For UK groups with multiple legal entities, consolidation adds complexity. Eliminate intercompany transactions. Convert foreign currency budgets at assumed exchange rates. Ensure each entity's budget aligns with its legal obligations — for example, a UK subsidiary must budget for the Apprenticeship Levy (0.5% of pay bill above £3 million) separately from an Irish entity that has no such obligation.

The consolidated P&L should follow your standard management reporting format. Revenue, cost of goods sold, gross profit, operating expenses by category, EBITDA, depreciation and amortisation, interest, tax, and net income. Every line should trace back to a source department or assumption. If you cannot explain where a number comes from, it should not be in the budget.

Present the consolidated budget to the CFO and leadership team. Focus on the big picture: total revenue growth, gross margin trajectory, headcount growth, operating profit, and cash impact. Common outcomes: "Revenue is too aggressive — model a 15% growth scenario alongside 25%", or "OpEx is too high — find £200,000 of savings". This is not failure; it is the process working as intended.

After incorporating top-level feedback, do a detailed review of each department's budget. Are there any one-off costs that should be flagged? Is the phasing realistic — or has everything been spread evenly across 12 months when the business is seasonal? Check that Q1 of the new budget connects smoothly to Q4 of the current forecast.

The final review before the board should focus on presentation and narrative. Numbers are necessary but not sufficient — the board wants to understand the strategy behind the budget. Prepare a one-page executive summary: what are we investing in, what are we deprioritising, what are the key risks, and what is the expected financial outcome? Anticipate the three questions your board will definitely ask and have answers prepared.

Lead with the strategic context: what has changed since the last budget, what are the key market dynamics, and what is the company's strategic priority for the year. Follow with the financial summary: revenue, margins, EBITDA, and cash position. Then walk through the major investment areas: headcount, technology, go-to-market. Finish with risks, sensitivities, and the downside scenario.

Boards typically focus on three areas: revenue confidence (is the growth rate achievable?), cost control (are we spending wisely?), and cash (do we have enough runway?). Prepare scenario analysis for each: "If revenue comes in 20% below budget, here is the impact and here is our contingency plan." Having this ready demonstrates maturity and builds trust.

Once approved, communicate the budget to the organisation. Each department head should receive their approved budget with clear expectations about ownership and reporting. Set up monthly budget vs actual reviews starting in Month 1. The budget is not a document to be filed — it is a living framework for decision-making throughout the year. Consider a brief all-hands presentation covering the company's financial goals for the year at a high level, fostering alignment across teams.