Budgets lose accuracy fast. Here’s how CFOs stay ahead
Budgets go out of date quickly. The important part is noticing the changes fast and adjusting before they compound. Targets shift, forecasts drift, and the core assumptions start to break down much faster than most teams expect. It happens everywhere, even inside the best-run companies.
It's not that budgeting is broken. The reality is, we have to evolve the way we use budgets. The finance teams who genuinely get it right treat budgeting as a continuous process, not just that big annual exercise. They build simple habits that pull reality into the model early and often.
When planning, approvals, and reporting all stay connected, budgets stop being static documents gathering dust. They become active, useful tools for making decisions month after month, not just at year-end.
• Most budgets go out of date within weeks.
• Great finance teams don’t chase perfect plans — they build systems that adapt.
• Clear ownership, connected tools, and steady rhythm keep budgets useful all year.
• “Budget vs Actuals” isn’t about accuracy; it’s about decisions.
• Automation and cadence turn budgeting from a static task into a living process.
Planning matters more than the plan
Planning matters more than the plan
By February most budgets already need a rethink. The old saying still holds: no plan survives first contact with reality. Good finance teams treat planning as an ongoing job, not a once-a-year event.
What really matters is how quickly you bring real changes into the model and how clearly you explain what shifted. You need context people understand and actions they can take.
Start with “why” before you open the sheet
Start with the "why" before you open the sheets
A budget serves multiple stakeholders, and its construction should present a clear narrative, with specific "chapters" tailored to each audience. The board, the management team, and investors all require different aspects of this financial story:
- Boards require plans that are justifiable and defensible.
- Management needs clear assumptions and stretch goals.
- Investors seek a clear narrative that clearly links potential risks and opportunities.
The most skilled finance teams develop a single, core model and then add specific levels of detail for each audience. Attempting to create multiple "versions of the truth" inevitably results in widespread confusion and uncertainty later on.
Watch your three fast movers
Revenue, headcount, and balance-sheet drivers are the elements that change the quickest and have the biggest impact.
- Revenue: New products, changes in churn, or sudden pricing updates can honestly rewrite your entire forecast overnight.
- Headcount: This is usually your biggest cost, and it’s often the most emotional line item. Plan headcount around when the work actually needs the role, not just the month it sits in on the spreadsheet.
- Balance Sheet: This is where the big timing surprises tend to hide. Your runway lives here, by the way, not just in the P&L.
At ApprovalMax, we see every day how even small shifts in one entity can have a ripple effect across the entire group. Good forecasting connects those dots; it doesn't just total them up.
Keep scenarios simple
You really don’t need ten versions of the future. Just focus on three: a floor (worst case), a base (most likely), and a ceiling (best case).
Too many permutations just blur the overall picture. Concentrate on the few variables that truly move the business, and get everyone to agree early on how you’re going to model them.
Make budgeting a team sport
Once a company grows past 50 people or so, budgeting genuinely becomes everyone’s job.
Finance’s main role is translation. We take the GL codes and turn them into language that actually makes sense for the teams doing the work. When people understand how their specific spend connects to the bigger plan, they naturally take better ownership.
At ApprovalMax, for example, we use templates that reflect how each department works — like tracking campaigns, suppliers, or headcount—and then we map those back into the chart of accounts. It keeps ownership clear and the structure consistent.
Keep budgets visible
Most teams working on Xero have live accounting data but are still stuck using static budgets. That’s exactly where connected systems can help.
We've found that when every purchase order and invoice runs through approval workflows that are tied to budgets in Xero, it changes things. Approvers can actually see if the spend is within limits before they click “approve.”
It’s a simple change, but it totally alters behaviour. Overspend gets prevented upfront instead of having to be explained later.
Budget vs actuals: the monthly pulse
Your BvA meeting is not a spreadsheet review. It’s the place where performance actually comes alive. Focus on the variances that truly matter. Each one should have a clear story and an action attached to it.
To facilitate this at ApprovalMax, each department owns their numbers. Finance’s job is to facilitate the discussion, not to dictate the outcome. This process builds trust and improves alignment, and it’s what reduces unexpected spend variances and other surprises.
AI is the new variable
AI spend is still unpredictable, so it needs the same discipline as any other new investment.
At ApprovalMax we treat it like any other investment: staged, measurable, and linked to clear outcomes. Our four phases, data, infrastructure, experimentation, and productisation, keep our progress grounded in real metrics, not just buzzwords.
Avoid the usual traps
Most of the pain that comes with budgeting is caused by poor habits, not complexity.
- Too many versions of the model flying around.
- Slipped deadlines that mess up the whole cadence.
- Overbuilt models that take weeks to update.
- Poor communication about what's changed and why.
Keep one governed model. Work backwards from the fixed dates. Use automation to update the numbers, not rebuild the whole thing from scratch. Budgeting should drive learning and better decisions, not just control.
Build rhythm, not heroics
At ApprovalMax, our finance rhythm is simple and consistent:
- Week 1: Close the books and load the actuals
- Week 2: Leadership budget vs actuals review
- Week 3: Department check-ins to discuss performance
- Week 4: A short, executive summary with runway, key variances, and decisions that need to be made
Consistency always beats those last-minute, heroic efforts.
The takeaway
Budgets will always age the moment you print them. The real question is whether your process ages too. The best finance teams keep their process alive and relevant with connected systems, clear ownership, and a steady, predictable cadence.
That’s how you turn budgets from static files into a living, breathing framework for smarter decisions, all year round.
Dan Schonfeld is the Chief Financial Officer at ApprovalMax. A former lawyer and management consultant turned finance leader and board member, he has led budgeting and BvA processes across multi-entity software companies in eight geographies, with a focus on building pragmatic FP&A foundations on Xero.
