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Beyond budgeting

Beyond budgeting replaces the fixed annual budget with adaptive rolling forecasts and relative performance targets, arguing that rigid annual plans are too inflexible and gaming-prone for fast-changing markets.

ByHoang TruongUpdated

FrameworkBeyond Budgeting

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Traditional budgeting fixes a target twelve months in advance, which invites weeks of negotiation, gaming of easy targets, and a plan that's outdated within months. Beyond budgeting replaces it with rolling forecasts updated every quarter and performance measured against relative benchmarks rather than a negotiated figure, but only works if decision authority genuinely decentralises.

Where it fits
SubjectManagerial AccountingAdvancedTopicBudgeting & the Master BudgetAdvancedTopicStrategic Performance & the Balanced ScorecardAdvanced

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PracticeCORE

A manufacturing firm scraps its annual budget and replaces it with quarterly rolling forecasts. Divisional performance is measured against industry-peer benchmarks rather than negotiated internal targets, explicitly to remove the incentive for managers to understate potential when setting their targets. Which management approach does this describe?

Select an answer to check your understanding.