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Updated by Charles Bystock on 06/12/2021

Who says you can’t teach an old CFO new accounting models? Last year, budgeting was an exercise in winging it. But reopening demands a return to more concrete budgeting practices. That doesn’t mean a return to pre-COVID budgetary processes. What do CFOs need to know about better budgeting for 2022? What lessons should we learn from the pandemic as we look ahead to a new fiscal normal?

How has budgeting changed?

The biggest budget lesson we learned from COVID-19 is this: Agility can save us. A McKinsey survey reports 43% of CFOs surveyed say they must streamline traditional budgeting processes to allow for more agility. The traditional annual budget process has been replaced with a cash-is-king mentality tied to unreliable supply chains and other pandemic-related service disruptions. Volatility is the new normal, and business must plan and build budgets to deal with disruption.

2022 new

What’s new in 2022? Greater speed and cost controls — which began with the tumultuous COVID-19 markets of 2020 — are here to stay. The C-suite must now recognize the need for agility as a key approach to enterprise finances. Watchwords for this new approach include: “strategic,” “flexible,” and “value-centered.”

In the age of agility, CFOs must eliminate rigid, line-item heavy budgets. A fundamental rethink of budgeting takes time, but CFOs can make several improvements to change finance processes. Examples include:

  • A shift from absolute budgetary targets to a monthly rolling aggregate tied to benchmarks.
  • Elimination of long budgeting processes.
  • Simplified budget details for more “wiggle room.”
  • Consider a move to a centrally managed funding pool of 10-15% of revenues in which certain parameters trigger financial support to variable-cost categories or release funds for overhead items, such as hiring and other capital expenditures.

These steps will move your business toward a more proactive approach to chaotic times, but none of this will work without new measures of spend control.

cost control

Cost controls are critical — especially in the cloud

During the pandemic, most companies were forced to focus on costs and cash as the two primary calls to action from a revenue perspective. This approach is unlikely to change anytime soon, so new budgeting strategies must tie to cost controls. Set clear expectations with department heads about spend versus ROI. Tie profit and loss to operational KPIs which link back to specific business strategies.

Finance teams must look for short-term wins to offset costs. No matter the current state of the bottom line, businesses must prepare for future fiscal uncertainties by instigating or shoring up cost control mechanisms — especially in the cloud.

redesign budget

Five steps for redesigning budget processes

The new budgeting reality is simple: Perfection is not possible in these markets. This is a stressful, but necessary, realization for CFOs and leadership teams. Under current circumstances, these five strategies will help enterprise budgets adapt for 2022:

  1. Conduct stress testing against your budget assumptions. Stress testing is a monthly process for determining which economic predictions came to fruition. This measure is balanced against the impact of various strategic initiatives. 
  2. Identify key business drivers to determine spending shifts. This zero-based budgeting approach needs to be reexamined as our new normal to help companies reprioritize spending within a real-time market context. This is an ongoing process — as opposed to the traditional annual model.
  3. Eliminate fixed budgets and focus on modular models. Modular budgets hold back central spending to allow for flexibility of cash on hand. Contingency planning should tie to every spending channel. At the project level, instigate resource controls with deployment phases tied to go- or no-go decision making.
  4. Rethink decision-making processes to include real-time KPI data. Use data to justify decision-making within the context of company strategy. Engage the C-suite and department leadership with transparency regarding decisions affecting organizational health and wellbeing.
  5. Protect your finance teams from burnout. A continuous improvement approach requires, finally, that you protect your finance teams from burnout. Radical change, market uncertainty, and external pressures (e.g., COVID-19, family life, remote work, etc.) create conditions for employee exhaustion. Reassess priorities and provide clear direction for strained, overworked teams.

What shifts in resources and capabilities are required to support your business in uncertain times? Visit to learn more about forging and sustaining a new path to enterprise agility.