Top 10 Budget and Planning Interview Questions & Answers

• Why do you want to work for our company? …
• What are the most important elements of developing an annual budget? …
• How comfortable are you using budgeting software programs? …
• What is the best way to communicate budget deadlines?

How to answer the interview question: Describe your experience managing budgets.

1. Tell Us About Some of The Advantages of Zero-Base Budgeting

Zero-base budgeting has several advantages. It eliminates the possibility of budget inflations as the manager must relate all the expenditures to the activities. It also drives communication among the senior management team on corporate mission and how to achieve it.

This type of budgeting promotes analysis of other alternatives since managers are expected to weigh all the alternatives of performing any activity. It further eliminates activities that do not align with the key ones as the managers are expected to only focus on the critical activities. Lastly, this type of budgeting helps a company focus on its missions as it sparks a discussion among the top management on the company’s missions and how they can be achieved.

2. How Do You Feel About Budgetary Slack?

I will take the most controversial route. I believe that budgetary slack helps in financial reporting and making estimations. Coming up with an outline that incorporates slack can help the company think tank to develop ideas to drive operations within a more limited budget.

3. What Is Your Experience Dealing with Budgeting Software Programs?

I have been using budgeting software programs ever since my early years as an accountant and even recently as a fiscal analyst. These play an essential role in compiling data and storing information, and comparing different financial reports with earlier predictions. Some of the standard programs that have helped me in my career are Centage and Prophix. I have learnt to navigate most systems.

4. Could You Please Tell Us the Difference Between a Budget and a Forecast?

As the name suggests, a forecast estimates what the business or project wants to achieve. In contrast, the budget is a quantified expectation of the intended results. Unlike the forecast, the budget has a longer lifespan and is usually updated once a year depending on how frequent it should capture different information. (You can give more differences).

5. What Strategies and Mindset Is Required for This Role? Explain with Examples

Tip1: Explain, using your personal experiences.

Tip 2: Show that you are prepared for this interview question.

Sample Answer: The budget manager must be driven towards competency and attention to detail. The job requires strong communication and analytical skills that will prove that you are present in the situation to grasp the pitfalls for the company and eliminate them. I am a good fit because I am hardworking and committed to delivering quality and quantity as needed.

6. As a Budget Manager, What Management Style Do You Have?

Tip 1: Don’t use labels.

Tip 2: Use the situational style to answer this question.

Sample Answer: In my experience, assigning responsibility and authority is very important. A team should be able to develop and grow like individuals and not be held back by ego or low expectations. I believe that we all should focus on building a team. Every member must be clear about his/her role and should know where they each fit. I also believe in giving real-time feedback. My work style is based upon forward-mindedness and a drive to do more in less time. I am always inclined to ring the most out of the assets we as a company have in store.

7. Why Should You Prepare An Annual Budget?

Answer :

• It sharpens your understanding of your goals
• It gives you the real picture – by accurately showing you what you can afford and where the gaps in funding are, your budget allows you to plan beforehand to meet needs, and to decide what you’re actually able to do in a given year
• It encourages effective ways of dealing with money issues – by showing you what you can’t afford with known income, a budget can motivate you to be creative – and successful – in seeking out other sources of funding
• It fills the need for required information – the completed budget is a necessary element of funding proposals and reports to funders and the community
• It facilitates discussion of the financial realities of the organization
• It helps you avoid surprises and maintain fiscal control
  1. Update budget assumptions.  Review the assumptions about the company’s business environment that were used as the basis for the last budget, and update as necessary.
  2. Review bottlenecks. Determine the capacity level of the primary bottleneck that is constraining the company from generating further sales, and define how this will impact any additional company revenue growth.
  3. Available funding. Determine the most likely amount of funding that will be available during the budget period, which may limit growth plans.
  4. Step costing points. Determine whether any step costs will be incurred during the likely range of business activity in the upcoming budget period, and define the amount of these costs and at what activity levels they will be incurred.
  5. Create budget package. Copy forward the basic budgeting instructions from the instruction packet used in the preceding year. Update it by including the year-to-date actual expenses incurred in the current year, and also annualize this information for the full current year. Add a commentary to the packet, stating step costing information, bottlenecks, and expected funding limitations for the upcoming budget year.
  6. Issue budget package. Issue the budget package personally, where possible, and answer any questions from recipients. Also state the due date for the first draft of the budget package.
  7. Obtain revenue forecast. Obtain the revenue forecast from the sales manager, validate it with the CEO, and then distribute it to the other department managers. They use the revenue information as the basis for developing their own budgets.
  8. Obtain department budgets. Obtain the budgets from all departments, check for errors, and compare to the bottleneck, funding, and step costing constraints. Adjust the budgets as necessary.
  9. Obtain capital budget requests. Validate all capital budget requests and forward them to the senior management team with comments and recommendations.
  10. Update the budget model. Input all budget information into the master budget model.
  11. Review the budget. Meet with the senior management team to review the budget. Highlight possible constraint issues, and any limitations caused by funding limitations. Note all comments made by the management team, and forward this information back to the budget originators, with requests to modify their budgets.
  12. Process budget iterations. Track outstanding budget change requests, and update the budget model with new iterations as they arrive.
  13. Issue the budget. Create a bound version of the budget and distribute it to all authorized recipients.

Load the budget. Load the budget information into the financial software, so that you can generate budget versus actual reports.

8. What Are The Steps In Preparing A Budget?

Answer :

Many organizations prepare budgets that they use as a method of comparison when evaluating their actual results over the next year. The process of preparing a budget should be highly regimented and follow a set schedule, so that the completed budget is ready for use by the beginning of the next fiscal year.

Here are the basic steps to follow when preparing a budget:

1. Update budget assumptions.  Review the assumptions about the company’s business environment that were used as the basis for the last budget, and update as necessary.
2. Review bottlenecks. Determine the capacity level of the primary bottleneck that is constraining the company from generating further sales, and define how this will impact any additional company revenue growth.
3. Available funding. Determine the most likely amount of funding that will be available during the budget period, which may limit growth plans.
4. Step costing points. Determine whether any step costs will be incurred during the likely range of business activity in the upcoming budget period, and define the amount of these costs and at what activity levels they will be incurred.
5. Create budget package. Copy forward the basic budgeting instructions from the instruction packet used in the preceding year. Update it by including the year-to-date actual expenses incurred in the current year, and also annualize this information for the full current year. Add a commentary to the packet, stating step costing information, bottlenecks, and expected funding limitations for the upcoming budget year.
6. Issue budget package. Issue the budget package personally, where possible, and answer any questions from recipients. Also state the due date for the first draft of the budget package.
7. Obtain revenue forecast. Obtain the revenue forecast from the sales manager, validate it with the CEO, and then distribute it to the other department managers. They use the revenue information as the basis for developing their own budgets.
8. Obtain department budgets. Obtain the budgets from all departments, check for errors, and compare to the bottleneck, funding, and step costing constraints. Adjust the budgets as necessary.
9. Obtain capital budget requests. Validate all capital budget requests and forward them to the senior management team with comments and recommendations.
10. Update the budget model. Input all budget information into the master budget model.
11. Review the budget. Meet with the senior management team to review the budget. Highlight possible constraint issues, and any limitations caused by funding limitations. Note all comments made by the management team, and forward this information back to the budget originators, with requests to modify their budgets.
12. Process budget iterations. Track outstanding budget change requests, and update the budget model with new iterations as they arrive.
13. Issue the budget. Create a bound version of the budget and distribute it to all authorized recipients.
14. Load the budget. Load the budget information into the financial software, so that you can generate budget versus actual reports.

The number of steps noted here may be excessive for a smaller business, where perhaps just one person is involved in the process. If so, the number of steps can be greatly compressed, to the point where a preliminary budget can possibly be prepared in a day or two.

9. What Are Your Weaknesses?

Tip 1: The interviewer wants to understand how you see yourself and hear your evaluation of yourself.

Tip 2: Don’t ever say that you don’t have any weakness.

Sample Answer: I am always inclined to learn new things and make room for improvement, but there are a few things I would still like to improve on. One of these skills is not being proactive or able to see too far into the future. I see all of the upcoming situations I have to deal with financially, but I must be better as seeing what is coming. I am working on this issue by doing more homework on tasks as they are assigned to me so I can analyze each situation more thoroughly.

10. What Is Continuous Budgeting?

Tip 1: Show that you have done your homework regarding this position.

Tip 2: Try keeping it short, but concise.

Sample Answer:

Continuous budgeting is the cycle of gradually adding one more month to the end of a multi-period budget plan as each month passes by. This methodology has the benefit of continually taking care of the budget model and updating budget suppositions for the last incremental time of the financial plan. The disadvantage of this methodology is that it may not yield a budgeting plan that is more reachable than the customary static budget plan since the budget timeframes preceding the gradual month just added are not reexamined.

FAQ

How do you explain budget in interview?

What are good questions to ask about budgeting?

• What is my income? Start with your monthly take-home paycheck. …
• What are my debts? …
• What are my expenses? …
• Does it add up and, if needed, what can I change? …
• What are my priorities? …
• How can I make this sustainable?

What are the 4 steps of a budget?

What are 3 essentials for a budget?

• Needs. These are expenses that you must pay in order to live and work, such as a mortgage or rent and car maintenance. …
• Wants. These are expenses that don’t qualify as needs and don’t include your savings and payments toward debt. …
• Savings and debt repayment.