• Once you establish the appropriate assumption base for each account, new budgets can be prepared very quickly. Perhaps the one reason budgets demand so much analysis time is that we don’t learn from past successes or failures. The past year’s budget should not be abandoned automatically, but it usually is. Once the year is ended, how often do you look back at last year’s worksheets?

If you have used assumption-based documentation to build the current year’s budget, the actual outcome-in comparison to your estimation work-is a very revealing document. You can improve your budgeting technique, your accuracy rate, and your sense of timing, by referring to the previous budget while preparing a new one.
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Developing appropriate assumptions might sound like a very time-consuming effort. You do need to create a documentation file for each and every category of expense in your department, develop the assumption, and then carry the result over to a worksheet. But this will not take any more time than doing your budget in the traditional manner. In fact, proper assumption-based budgeting will save time in the long run, for the reasons listed below:

• Properly documented budgets reduce your task next year. One of the greatest complaints about budgeting is that the process is long and tedious. It comes at the end of the year, often demanding overtime for everyone, and it drains your energy at a time when you’re also trying to finish up other departmental matters. While assumption-based documentation might seem like just more paper¬work, it is a form of departmental planning and organization. Thus, it saves time, cuts down on duplication of effort, and makes the entire task much easier-rather than harder.