Introduction
Regardless of size, the budget’s role is crucial in actualizing the organization’s success. The budget shows how the organization will allocate money according to the overall budget, mainly its income and expenditure. A budget can only be made, regulated and distributed effectively in an organization after deciding who will have financial control. Those implementing the budget should be vigilant as they handle it: failure to do so could invariably lead to an organization’s collapse. On the other hand, this calls for the designation of a unit of account, which will help limit the excess movement of the budget. For this assignment, I was given permission to interview a Chief financial officer from Best Buy, Matt Bilunas, about how his company adopts budgetary procedures.
I have done it through Mr. Bilunas talking with me several times during my time working at Best Buy. On the whole, I had a precious experience learning the detailed budgeting processes of the organization face-to-face from the Chief financial officer. Let me share some information about Matt Bilunas’s career. Matt Bilunas ‘ profile stands out among others due to his professional and educational experience in finance. He graduated from the University of St. Thomas – Opus College of Business in Minneapolis, obtaining his Bachelor’s degree in Accounting. After graduation, he was a staff accountant in a major company for some time. He repeatedly earned critical competencies in financial reporting, auditing and corporate finance.
In 2006, Mr Bilunas was hired by Best Buy as a financial analyst. Since then, he has proved that he could successfully work with budgets and forecasts and other tasks related to economic analysis. His outstanding performance and continuous commitment resulted in his promotion from Manager of Finance to the Chief Financial Officer of the year 2018. Among these duties, as the chief financial officer of Best Buy, Matt Bilunas oversees the company’s financial operations, which include budgeting, forecasting, and economic modelling. Among his many responsibilities, he focuses on planning and working with the budget so that Best Buy’s strategic goals and objectives are deliberately pursued.
Interview
What is the organization/company’s fiscal year?
Answer: Best Buy uses the fiscal calendar, which runs from late February to early March. Our fiscal year 2024 began on February 26th, 2023, and ended on March 2nd, 2024.
What type of budget model does the organization use?
Answer: At Best Buy, We take a blend of incremental, zero-based, and priority-based budgeting methods at BestBuy to achieve optimal results. We originate with the previous year’s budget as a basis but request explanation and forgiveness for overruns and perform the annual zero-based process to examine all the expenses. Moreover, we always ensure that our budget coincides with what we think are our most important strategic objectives and the growth areas for our company.
Who sets the mission, goals, and objectives? How will the goals be measured?
Answer: The Corporate Executive Team defines and approves the company’s mission, vision, and long-term financial and operational strategies on an annual basis before sending them for the Board of Directors’ approval. Finally, the strategic goals and objectives appear in the hierarchy of the departments/cost centres. We periodically evaluate our performance through several metrics, such as revenue, rates of comparable sales, gross profit, operating income, market share, and customer satisfaction scores.
Is the budget planning process participative or authoritative?
Answer: We highly encourage students to take advantage of our participative approach. The VP and the GM work top-down, setting the overall financial target. Department VPs and budget managers build the budgets based on these bottom-up. Next, the finance group will pull together the budgets and conduct reviews, criticizing assumptions and facilitating adjustments to reach a consensus. Finally, the consolidated budgets will be presented to senior management for final approval.
What are the steps in preparing the budget from start to finish? What tools do you use? How long is the process?
Answer: The main steps are: 1) goals, (2) budget-template distribution, (3) departmental budget-proposal submissions, (4) finance review and calibration, (5) leadership reviews, (6) executive approval, and (7) final budget communication. We apply this performance management software in our corporate segment to effectively combine submissions, modelling, reporting and workflows. The process, from the start with the budget initiatives to the end of the approved budgets passing 3-4 months
Who is responsible for monitoring the budget? What controls are in place?
Answer: Each department manager, in turn, is vested with the task of ensuring that the unit’s budget under their purview is monitored and maintained. This is why they check their spending regularly. The actual reporting and variance analysis of the accounts. It comes out with an administrative system that includes thorough reviews of purchase orders, business travel, salary changes, and other financial controls. Moreover, we also incorporate fund and cost centre hierarchies in the inserted compliance checkpoints.
How do you approach budget forecasting and planning for future periods? What analysis goes into projections?
Answer: Among the forecast components used are spending history, competition analysis, shopper model, econometrics, and supplier/vendor commitment. Through the application of statistical techniques like regression analysis, we produce conceptualizations, and data science groups develop further up-front demand expectations, factoring in customer insights, seasonality, and external factors.
How do you identify and prioritize spending needs? What factors guide allocation?
Answer: We have an extensive yearly procedure of raising the question about the need for additional expenditures from the part of departments to us. Such projects are then bucketed based on the feedback from our corporate strategy and growth priorities, ROI verdict, risk scoring and resource collocation. Eventually, the budget is spent on deals that contribute relative value and significance and on meeting the organization’s goals of driving earnings growth, improving customer interactions and doing business more productively.
Tell me about defending a proposed budget to leadership.
Answer: One cause was last year, for instance, when we were allocating substantial capital and skills to our supply chain systems to ensure the quickness of our delivery to access opportunities in online shopping. To support our business case, we implemented a product analysis exploring the net income growth if we can reduce the delivery time to make more customers shop with us and return. We designed different investment levels, each connected to a different level of probability of return. This value-based data was vital in securing leadership approval of our needs.
How do you partner with these departments on budgets?
Answer: Developing and implementing the new framework has required us to establish a very collaborative and integrated workflow to build close relationships with operations teams and business partners. With their preliminary prototypes, we help them clarify the planning assumptions, provide a forum for divulging across interrelated areas, and develop well-grounded investment cases below the data. We also constantly meet with the department heads of each stakeholder to ensure execution is on any plan and resort to a budget re-distribution or adjustment whenever needed. They won’t be able to provide constant 24*7 supervision. However, the partnership will be essential, and transparency is a must.
Who approves the final budget? Who gets notified? When is it implemented?
Answer: Our consolidated corporate plan, which includes capex elements, would be reviewed several times in October before being finally approved by our Board of Directors in the last week of January. After getting approval, we inform all department and budget managers how much funds they will get for every annual and quarterly contract. We upload the approved budgets from the previous fiscal year in corporate systems’ cost centres and make them accessible starting the first day of the next fiscal year.
What essential skills are critical for success as a budget manager?
Answer: Critical thinking, foreign language, and communication are essential. As a budget manager, your task is to thoroughly grasp how departmental spending is essentially aggregating efforts needed to achieve enterprise goals. You have to put a detailed, persuasive, and enticing financial plan before the leadership. It entails conveying the objectives, bounds and reasonability to stakeholders extremely well and articulating strategically to help them make informed investment decisions. Working collaboratively and maintaining good relationships continually are key here. These are those areas which now I haven’t mastered yet, but I still endeavour to make them better for the next budget period.
Conclusion
An interview with Matt Bilunas, the chief financial officer, highlighted some of Best Buy’s complex financial processes, which form the backbone of the company’s economic success. This approach made advocacy for interagency collaboration and linked budget expenditures to strategic policies seamless. The development of reliable forecasting models that provide historical data, market trends and strategies can hold the key to correct projections. Strict monitoring tools are essential, such as budget vs. well, accomplishing actual reporting, analysis of variance, and following the set-aside monies. Inter-department cooperation and open communication lead to the buy-in of the department and enable it to work dynamically throughout the year. Later, the efficient management of budgets privileges a mindset that mixes strategy tenacity with financial skill, clear communication, and leadership influence to develop captivating business cases and make strategic investment decisions that will sustain the organization’s long-term growth and good performance.
References
Best Buy. (2024). Matt Bilunas. Best Buy Corporate News and Information. https://corporate.bestbuy.com/our-leadership/matt-bilunas/
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