Here's how you can proactively ready yourself for financial crises in budgeting and forecasting.

I would add the organizational aspect as a crucial enabler. It's important to identify potential allies in this challenging endeavor and understand who may still need further convincing. Additionally, maintaining clear and, if necessary, tactful communication with top management and the C-suite is essential. Keeping them informed and updated ensures alignment and support for your financial strategies.

Automating savings and investment contributions to ensure consistent growth of emergency fund and investment portfolio is crucial step. An example I’ve seen is the monthly contribution collected from members for the emergency fund by a co-operative housing society. As per the Maharashtra Co-operative Societies Act, 1960, and its model bye-laws, the typical contribution for the emergency fund is often set at 0.25% of the society’s total service charges. However % contribution might differ slightly based on the society’s financial policies and decisions made in the Annual General Meeting (AGM).

In times of economic uncertainty, it is wise to keep a emergency fund. One of the safest options is to keep three to six months of funds in a very liquid, savings account. In periods of potential high inflation, a savings account with a competitive interest rate can help mitigate this inflation. Despite savings accounts being a historically very safe option especially with FDIC insurance protection, it is important to choose a bank with a strong balance sheet. There is no such thing as a "riskless" investment. Consulting regularly with a credible Financial Advisor or keeping up with market conditions is a great way to mitigate turbulent market conditions.

One thing I found helpful, such as having a budget of at least 4 to 6 months expenses in an easily accessible account. And I want to add something, I'll suggest not to buy a thing or invest until you don't have the funds of at least three times the cost of the asset or the amount you want to invest specially when the investment or asset is not necessary. For example if am planning to purchase a bike which costs me 20000, I'll not purchase it until I have cash around 50 to 60 thousand. It saves us from unfortunate moments like default and I would call it a best analysis must be performed before investing or purchasing any asset which indirectly will become your liability such as vehicle.

One thing we can't predict is the black swan effect. But good risk management is key in the world today . You simply can't start a project without this

Analyzing risk involves systematically identifying potential threats to an organization's financial health and assessing the likelihood and impact of these risks. This process typically starts with a thorough review of internal and external factors, such as market trends, regulatory changes, and operational vulnerabilities. Quantitative methods, like statistical analysis and financial modeling, are often used alongside qualitative assessments, including expert opinions and scenario planning. By evaluating both the probability of risk events and their potential consequences, organizations can prioritize risks and develop strategies to mitigate them.

For the most "hands-off" approach to analyzing market risk is by working with a credible, trusted financial advisor. For those that would like to analyze for themselves, keeping an eye on macroeconomic conditions such as the stock market, bond market, and international trade will aide in making informed investment decisions. For example, an interesting topic currently in international trade is the future of energy trade and the role of foreign currency within. Recently, there has been a shake up in how oil will be purchased in the future. Historically, much of oil has been purchased in the US Dollar. However, an international organization known as BRICS may change that in the future.

When you prepare budgets, please consider various scenarios in mind. while in flexible planning some time you have to adjust some expenses at any particular situations. for example, In order to prevent run out of cash situation, sometime you have to reduce some of the variable expenses. and you can control your spending.

En mi experiencia, la planificación flexible es esencial para enfrentar crisis financieras en la elaboración de presupuestos y previsiones. Un presupuesto adaptable a las circunstancias cambiantes es crucial. Asigna una parte de tu presupuesto a gastos variables y revisa tu plan financiero regularmente. Si una crisis parece inminente, ajusta tus hábitos de gasto y ahorro para no ser tomado por sorpresa.

Ponto essencial: acompanhe o que está acontecendo com as variáveis que a empresa não tem poder direto (econômicas, fiscais, etc). E se atualize sobre as melhores práticas do setor. Alguém de FP&A precisa de manter atualizado sempre.

Having a good liquidity is paramount for a company’s ability to attract investors. Generally, creditors and investors look for liquidity ratios of 2 or 3, anything below 1 is not a good look. What is a liquidity ratio? This is the ability of the business to pay off their debts (to employees, to shareholders, to suppliers, etc) if they’re due tomorrow, translated in real numbers. For my accounting nerds, the simplest formula is current assets/current liabilities. There are more detailed formulas that take into account cash & cash equivalents and other quickly convertible assets but the general idea is: is my money big enough to pay my bills now if I have to.

Proactively preparing for financial crises starts with an emergency fund plan but doesn’t stop there. Building an emergency fund for essential expenses provides a financial buffer during crises. Create multiple financial scenarios (best-case, worst-case, most likely) to understand potential impacts and prepare adequate reserves. Manage crises before they occur by frequently reviewing your budget and forecasts, reducing unnecessary expenses, keeping debt levels manageable, and closely monitoring cash flow. Maintain open communication with stakeholders, employees, investors, and suppliers. Transparency helps manage expectations and fosters trust. By implementing such practices, you can better weather financial crises and ensure stability.

The article contains most of the aspects of budgeting. However, one should also be mindful during budget preparation that it should be realistic and based on the prevailing market conditions rather the experience base data and prices. Simultaneously project team should be educated on how to manage budget during project execution. The team players play critical role in budget management by crashing and crunching.