Traditional budgeting vs Beyond budgeting

Budget is a quantitative plan for acquiring and using resources over a

specified time. Budgets were born in the 1920s to help managers control
costs and cash flows. By the 1960s, they had become fixed performance
contracts between company superiors and subordinates.

Traditional budgeting
Firstly let us look what traditional budgeting means.
Traditional budgeting is forecasting your company's income and
spending for the following year based on the previous year's budget. A
budget is a financial instrument that aids in the forecasting and analysis
of your company's profits and spending. Traditional budgeting offers
you a framework to support your projections by looking at your past
budget.
The reason of traditional budgeting being a better choice are given
below:
 Traditional budgeting is used by a large majority of businesses,
over 90% in developed and developing nations (Goode and Malik,
2011; Pietrzak, 2013). Budgeting is alive and well, according to
Dugdale and Lyne, who conducted a study of financial and non-
financial managers at 40 UK firms in 2006.

 The traditional budgeting approach is commonly found in

business. It includes a top-down approach and manages almost
purely “from the top.” Traditionally, budget decisions are firmly
rooted at the management level. It translates the objectives into
operational goals, plans and initiatives for all departments and
employees.
  If you're looking for funding, traditional budgeting is also vital.
Before investing in your firm or giving you a loan, investors and
lenders want to examine your financial plans and estimates. You
can show them your estimates and back up your rationale with a
traditional budget by referring to the previous year's budget.

 Management has more control over spending resources and

allocating funds, rigid plans can be applied to focus people on
compliance.

Beyond Budgeting:
Beyond budgeting is the concept which encourages the company to
abandon the traditional budgeting and focus on the adaptive
management process. It suggests the company should stop using the
annual budget and try to focus on a highly decentralized organizational
system.
Arguments in opposition to Beyond budgeting:
 The Beyond Budgeting concept does not have a uniform structure.
It's essentially a set of best practices employed by mature
businesses that have successfully addressed some of the flaws of
traditional budgeting. This means that in order for the model to
work, each organization must develop its own set of management
tools and tailor them to its internal budgeting system.

 It is relatively a fresher approach to most of the companies and it

does comply with the company structure.

 A small portion of organization use Beyond budgeting as their

main tool.
  Budgeting takes up around 30% of a manager's work throughout a
management year, using the beyond budgeting strategy would take
extra time.
 Every organization sets specific targets and objectives and the
management style, culture and attitude towards employees will
determine the approach of budgeting within each organization.
Moreover, management could find it difficult to totally abandon
budgeting.

In conclusion , Every firm has particular goals and objectives, and the
method to budgeting within each organization is determined by the
management style, culture, and attitude toward people.
Furthermore, because budgeting is ingrained in management's culture, it
may be difficult to completely forsake it. Traditional budgeting
approaches will need to be refreshed and revitalized in the near future.
Beyond budgeting, a fundamental transformation is required, which
entails substantially restructuring a company's management paradigm
and necessitates a decentralized management style. And, in many
circumstances, organizations are not yet prepared for such changes.
Beyond budgeting, we believe, will revive management accounting's
role in future corporate operations and success.

managers can consider the following technique of budgeting:

Rolling Budget: A rolling budget is one that is updated on a regular basis
by adding another accounting quarter. It forces management to examine
the budget on a frequent basis in order to develop a more exact and up-
to-date budget.