Insight 10 – Big Picture Budgeting

| July 22, 2026

To move from annual budgets to a three to five-year time horizon for the public sector enables budgets to align with the big picture of long-term objectives and outcomes. In order to impact change, you need time.

The budgeting process, particularly in local government, has been focussed on an annual balanced budget which can be difficult to achieve. However, having a budget that reflects a 3-to-5-year Medium Term Financial Strategy (MTFS) will allow for some years to have planned deficits knowing that these will be covered in future years.

There is a caveat however, deficit budgeting must always be justified as a means to an end, and those preparing budgets must be confident in their ability to be realistic about the future. They must be sure that short term deficits lead to longer term gains through a fully funded action plan that can be monitored and yield results. This is the only way SMART objectives can be achieved.

The greater the level of devolved budgeting, the more care needs to be taken in the planning stages. Firstly, the devolved structure needs to be designed, including the level of devolvement which should be matched with accountability. For example – department level, service level, operational level, delivery level, frontline level. One size will not fit all. Levels of devolvement will differ and should be appropriate to the organisational objectives in each case.

Those with budget responsibilities will then need to create their plan for the time horizon, and ensure their big picture combines seamlessly within an overall framework and strategic plan for the organisation. This then allows for deficit budgeting in some areas, and surplus budgeting in others. This approach can only work if the whole organisation has a baseline understanding of budget setting, monitoring and control; impact of supply and demand; relationship between cause and effect; and a concrete knowledge of the input, process, output, and outcome cycle in their orbit of responsibility. Of course, everyone should be mindful of the 3Es whilst driving for innovation, creativity and transformation.

If you are finding our insights useful and wish to have more information, please get in touch at info@hbpublications.com or visit www.hbpublications.com

Our book – Managing the Devolved Budget – is available in paperback and as an eBook.

HB Training and Publications International: Experts in Financial Management in the public and nonprofit sectors

Devolving Budgets – Theory and Practice – Insight 09

| July 2, 2026

Our first publication was Managing the Devolved Budget, and it remains our best seller. The concept of devolving budgets is not new. In fact, the debate about “Devolve or not to Devolve” has always, and continues to be, a topic of discussion. This insight considers the pros and cons of devolvement, the theoretical benefits and the practical challenges.

The theory of devolvement is the process whereby budgets are devolved to an individual or organisation who becomes the budget holder and who is then totally responsible and accountable for that budget. This requires management and financial responsibilities to be aligned such that the budget holder is accountable for the financial implications of their decision making.

The first step in this process is decentralisation, allowing centrally held budgets to be devolved within the decentralised structure. Getting the decentralised structure right is key to successful devolvement. This works at all levels within an organisation, within a service, within a department and within a team. The nearer budget devolvement is to service delivery, the more effectively budgets can be aligned to outputs and outcomes. This enables budget holders at whatever level to be held to account.

Whilst the theory is clear, the practicalities of implementation are not straightforward. The impact of stakeholders, stewardship and agency relationships can impact alignment and accountability. We set out below a brief table of benefits and challenges.

Benefits of DevolvementChallenges of Devolvement
Budgets devolved within a decentralised structure designed for best service delivery, meeting the 3EsAgreeing the type of decentralised structure best suited to the services that need to be provided
Budgets aligned with management and financial responsibilitiesAchieving true alignment may be impacted by external influences such as stakeholders, outsourced management and delivery agents
Increased autonomy for decision makers coupled with greater accountability for those decisionsTrue autonomy within a public sector setting may be hard to achieve due to tight decision-making structures and sign off requirements
Budgets more closely related to service delivery outputs and outcomes, providing greater measurement of success/failure.The further budgets are devolved, the greater the challenge to management structures which will also need to change in alignment

If you are finding our insights useful and wish to have more information, please get in touch at info@hbpublications.com or visit www.hbpublications.com

Our book – Managing the Devolved Budget – is available in paperback and as an eBook.

HB Training and Publications International: Experts in Financial Management in the public and nonprofit sectors

No Accounting for Accountability. Insight No. 8

| June 18, 2026

The above poster sets out why accountability matters and gives a financial accountability framework. All organisations will have financial policies and procedures which should be known and adhered to by those responsible for budgets and spending. The level of this knowledge and awareness should be assessed on a regular basis. Our online assessments may prove useful in some areas such as fraud awareness. They can be tailored to correlate to the localised procedures and ensure good practice becomes an organisational strength rather than a weakness.

Zero Based Budgeting – when to use it and when not!

| June 4, 2026

It is important to understand the definition of Zero Based. As described it assumes that the budget can be developed from first principles, with a clean sheet, as if from a new starting position. This allows for complete alignment with the objectives for the activity/service, along with freedom to decide the best possible approaches. Sometimes, in the public sector there is often a base from which the budget setting process has to begin. For example, staffing, (or staffing constraints), accommodation, location, etc.

ZBB must be put in the context of the environment and not looked at in the purist form. It does however remain a very good approach in many areas, such as a new service or aspect of a service; a new project; a new approach; and so on.

ZBB is also very useful as a “reset” to existing services and projects, particularly where they do not deliver the outputs required within a budget allocation.

Some public and nonprofit sector organisations often find themselves facing numerous constraints restricting the flexibility for budget setting that ZBB demands. An example of this is a service delivered with over 90% of expenditure being staff costs. Given that most staff will be on full time contract they become a fixed cost, resulting in ZBB only being applied 10% of the service.  ZBB is not always the best method in such circumstances.

The ZBB process can be summarised as follows:

This technique of budget setting may not be the most appropriate and can generate idealistic results which are not useful if there are budget constraints. In such circumstances the first step in the process must be “set out the constraints and limitations”. This then presents the backdrop for a ZBB approach which may generate new ways of working and better use of resources.

More information on budget setting is available in our books and courses. Ensuring we provide our human capital with the information it needs is a positive investment which leads to value for money.  

Contact: info@hbpublications.com or visit www.hbpublications.com

Experts in Financial Management in the public and nonprofit sectors

ERP Systems financial management reports

| May 21, 2026

The disconnect between financial reports from ERP Systems and financial decision making

Organisations in the public sector mainly depend on their staff to achieve their service objectives. Hence resources should be allocated to develop the core skills of these staff to enable objectives to be achieved. This approach underpins HCM (Human Capital Management) strategies and forms a major part of developing and retaining staff who can assist in delivering the 3Es (Economy, Efficiency, Effectiveness). The ability to understand financial information and use if for decision making should be one of those core skills for anyone with financial responsibilities.

In this insight we focus on one of the key pain points of achieving positive ROIs on significant investments in ERP systems. How do we ensure that our ERP system financial management output information is understood and utilised by the end user for decision making. Where the end user is often a staff member without financial skills, e.g. a budget holder in a non-financial role. Set out below are the stages in the cycle, illustrated in the above image.

  1. ERP system produces financial management reports
  2. Accessed by end user, e.g. budget holders, managers, service heads, etc. (usually direct real time access to the system or via a finance team intermediary)
  3. End user review of data, and analyses
  4. End user understands, updates, takes action
  5. End user feeds back via updated outturns/forecasts
  6. End user takes action to control outcomes
  7. End user monitors effectiveness of actions with impact analysis from following month’s ERP financial management reports

The core skills development of staff is critical, and the temptation to cut these areas as part of a savings plan my prove counter-productive.

We are happy to share further insights or have a personal conversation, just contact info@hbpublications.com and/or visit our budget on track page, and consider providing support for budget holders.

Public Services at what cost? Insight 05

| May 14, 2026

Knowing the true cost of public services is essential to financial management

Financial management is not just about managing a budget, but also about managing true costs. Some services are easier to cost than others when the unit of service is clear cut, such as the cost of a placement. However, it is possible to attribute costs to all services related to productivity and output. It is only when such exercises are undertaken that true comparisons can be made and value for money established.

In this insight we identify the key stages that should be undertaken when establishing the cost of a service.

  • Understand the different types of cost incurred in the delivery of a service
  • Establish the unit of service most relevant to monitoring and control; comparisons and measuring value for money
  • Align the unit of service cost with pricing where relevant
  • Determine the most appropriate approach to calculating a unit cost most relevant to the nature of the service being delivered
  • Determine which costs should be considered an overhead cost
  • Determine how overhead costs should be allocated to services and incorporated into the unit cost

For example, providing care home services incurs a wide range of costs including property, equipment, staffing, supplies, maintenance, management, etc. These costs are different in type. Some are fixed, others variable, and some a combination of both. Within the definition of these, some costs can be controlled in the short term, whilst others are uncontrollable. The unit of service in this case is most likely cost per resident. This unit of cost can be compared in the market and can also be aligned with pricing (e.g. cost plus/minus). The most simplistic approach to calculating the unit cost per resident is to take the total cost of service provision and divide by number of residents that use the service. However, this may not be appropriate if there are vacancies; different levels of resident need etc. Some costing exercises can be complex. Overhead costs are always debatable as to their definition, content, and allocation.

The argument that it is not possible to cost certain services can be challenged If this approach is taken. It can drive the way financial resources are allocated, and financial management then moves away from just managing the money to managing the value for money.

Training all staff with budget responsibility is key to enabling smarter forecasting and more realistic outturns.

Costing and Pricing Public Sector Services is an easy read and provides even more insight.

#PublicSectorFinance #BudgetManagement #NonProfitFinance #FinancialLeadership #BudgetHolders

Forecasting Outturns should not be guesswork! Insight 04

| May 6, 2026

Financial forecasting is essential as part of managing budgets

Looking ahead each month should be part of any budget monitoring routine. It should consider what part of the budget has been spent to date, how much budget remains; and is there sufficient budget to cover the future planned expenditure to the end of the year? The answers to the first two questions should be straight forward and available from the financial management systems. Regardless of the ERP/software being used, a report should be able to provide the spend to date and budget remaining. The first issue may be, is the spend to date accurate, complete, and up to date? (See future insights on commitment accounting). The topic of this insight is “future planned expenditure”. This is effectively a forecast, and it is required to “project the outturn”, that is how much will be spent by the end of the  year.

The future forecast is likely to change each month due to internal and external factors. In month one, eleven months need to be forecast to calculate the end of year outturn. By month 10, only 2 months forecast is required, and the outturn should be more accurate.

Forecasting is not guesswork, neither should it be a mathematical calculation. Some organisations still divide a budget by 12 assuming the same expenditure each month, taking no account of the internal and external environment affecting expenditure. The forecasts for the end of year often bear no relation to reality, and hence “shock” when budgets are over or under spent at the year end.

Whilst the future cannot be known, the forecast can be based on assumptions that take account of what has happened in the past, and the likelihood of planned expenditure being greater or less as a result of all known internal and external factors. Each month the forecast assumptions should be reviewed and updated to take account of what actually happened. This continued adjustment will enable the outturn to become more realistic each month and enables quicker and smarter decision making.

Training all staff with budget responsibility is key to enabling smarter forecasting and more realistic outturns.

Finance for Nonfinancial Public Sector Managers is an easy read and provides even more insight.

#PublicSectorFinance #BudgetManagement #NonProfitFinance #FinancialLeadership #BudgetHolders

Insight 03 – 5 Warning Signs Your Budget Is Heading for an Overspend

| April 29, 2026

Overspending does not happen on its own!

Spending has a causal factor. Expenditure is created as a result of the organisation agreeing to pay for something, whether it be staff, products, services, contracts, etc. The expenditure takes place as a result of either a plan, or a need that needs to be fulfilled. The driving force may be demand, desire, or direction.

Regardless of the type of expenditure, revenue or capital; statutory or non-statutory; it is important to know when expenditure is going to exceed the budget, and by how much. The sooner this is known the more likely an organisation can take corrective or mitigation actions in the short term. In the longer term there may be a need for structural change or realignment of resources.

In order to assist in gaining this foresight, we identify 5 warning signs your budget is heading for an overspend.

  1. Negative variances are consistent each month against a profiled budget
  2. Expenditure is being made against items not budgeted for (e.g. zero budget allocation to that area of spend)
  3. Committed expenditure not being fully accounted for
  4. Invoices arriving without purchase order references (i.e. no purchase order raised)
  5. Stakeholder influence diverting from plan and budgets

Projecting the outturn every month will help to crystalise the warning signs and help to prompt action.

All five areas and much more are covered in our training and publications.

Look out for another insight about how to ensure outturn calculations are as meaningful and accurate as possible.

Training all staff with budget responsibility is key to enabling warning signs to be noticed.

Managing the Devolved Budget is an easy read and provides even more insight.

#PublicSectorFinance #BudgetManagement #NonProfitFinance #FinancialLeadership #BudgetHolders

Why Budget Monitoring May Fail — Even When Reports Are Accurate

| April 23, 2026

Series 1 – Insight 02

Budget monitoring is not a tick box exercise.

Most organisations produce budget monitoring reports of one kind or another. They may be directly from the accounting system or prepared on a spreadsheet. The reports should be designed to assist users and hence tailored to suit organisational needs.

Regular budget monitoring should be fundamental to the role of any staff member with budget responsibilities. Budget monitoring actions are important routines and include:

  • Checking reports are complete and up to date (transactions processed accurately)
  • Checking all budget changes (virements) have been made
  • Understanding the budget profiles – even if not reflected on the report
  • Variance analysis – by value and percentage
  • Understanding budget drivers and reasons for variance
  • Projecting outturns
  • Progressing to budget management and control actions

Training in each of the above will enhance budget monitoring and yield better results.

Ultimately budgets need to be monitored to ensure the financial resources used are delivering the organisation’s objectives. If not, action needs to be taken.

Managing the Devolved Budget is an easy read and provides even more insight.

#PublicSectorFinance #BudgetManagement #NonProfitFinance #FinancialLeadership #BudgetHolders

Financial Management Insights for the public and nonprofit sectors

| April 15, 2026

Series 1: Insight 01 – How to set a budget

HB Training and Publications International is releasing a series of insights to assist with financial management in the public and non profit sectors. We are well placed to share our experience and expertise in the field. One of the directors is currently completing her PhD in public sector financial management this year.

These insights will take a topic, or part of a topic, and provide a sound bite for anyone interested in improving their skills and underpinning knowledge in the areas of budgeting, budget monitoring, and control. They are not meant to be comprehensive but should enable budget holders and managers consider the benefit of learning more about these topics.

How to set a budget

There are several budget setting techniques that can be applied to both expenditure and income budgets. They can be used independently or combined depending on the type of budget being set. The most popular techniques include:

  1. Incremental Budgeting
  2. Zero Based Budgeting
  3. Cash Limited Budgeting
  4. Resource Restricted Budgeting
  5. Activity Based Budgeting
  6. Contingency Budgeting

Each have their advantages and dis-advantages. It is worthwhile reviewing our article “6 Budget Setting Techniques – Explained”.

This insight promotes the most important aspect of budgeting is knowing the “assumptions” made in the production of each budget line. This may be as simple as the incremental approach of assuming last years budget plus inflation will be a reasonable budget for the future years. Or it may be more complex, using scenario planning and demand profiles. In any event many budget holders receive budgets without the assumptions upon which they are based, and are then expected to control them.

Whoever develops the budget (ideally the budget holder/owner) should have a record of their assumptions such that all budget users understand the underlying objectives for the use of that budget. We would recommend the more detailed the assumptions the better, as these will underpin budget monitoring and enhance the decision making process for budgetary control.

For further insights or for more information on budgeting for the public and non-profit sectors contact us at info@hbpublications.com.