Our budgeting process gives us an idea of where we think we are headed in the next year. Many times, what we think will happen, is not what happens in reality. After all, if we all had a crystal ball at our disposal, you would not be reading this blog right now (I know I would not be writing it!).

So what do we do when our targets move? What happens when that new loan product is not a big hit in our market? What if that CD promotion brings in more business than anticipated? One of the ideals that we discuss with our clients is reforecasting. Keeping the budget where it is for comparison, and adjusting the forecast when necessary to be able to view where you are actually headed in the coming year based on actual market changes.

Taking the original budget and making adjustments based on the real life activity in your institution will give you the ability to keep a better eye on your bottom line. That loan product did not work out, decrease the projected balances for the rest of the year. Do you need to still meet that total loan target? Which category can you (or are you) increase the balances, which in turns gives you the better picture of you income. You have those extra CD balances from that promotion to fund the loans, but how is that extra expense going to impact your bottom line. Take the time to look ahead throughout the year. This way you can get a better picture of where you are heading, instead of focusing on where you thought you were going to be heading when the budget was approved.

The best part of reforecasting? By reviewing and revising your assumptions on a regular basis, you will end up with a head start on your budget next year. This will enable you to streamline your process and make it less painful every year.