How to Communicate Budget Variance: FP&A Path to Strategic Action
Summary
To ensure a more meaningful impact, it’s essential to have a management system in place that facilitates proper reporting, allowing FP&A professionals to identify, communicate, and implement strategic changes based on project budget variance analysis. “By involving the right stakeholders—whether they be finance, operations, or leadership—and fostering collaboration, the organization can make informed decisions that address variances and prevent future issues,” argues Rizwan Khan, Managing Director at RMK Associates. With the ability to add both rates and costs, track time as billable and non-billable, and set up your dashboard with the exact reports you need, it’s simple to spot budget variances before they become a major issue or blocker to the project’s completion. Goldstone suggests to keep the following three best practices in mind: • Use clear and concise language, and present data visually (graphs, charts, dashboards) to make the information easily digestible for non-financial stakeholders. While many companies use project budget variances primarily as tools for control and accountability, leveraging these reports to drive strategic changes presents a significant opportunity to enhance the value of your finance team.
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