Questions to Ask in a Budget Meeting
These questions are for the person on the other side of the spreadsheet: a team lead or department head defending a line, an owner going through the year with a bookkeeper, a board member about to vote. They are grouped in the order most budget meetings move, starting with what the figures assume and how last period turned out, then which costs can still change, when the cash moves, what gets traded off, and who answers for each line after approval. A board member will get the most from the first and fifth groups, and anyone holding a budget from the third and the last.
Want questions from the whole vault instead? Try the random question generator.
The questions
Each question, and why to ask it
Assumptions
What assumptions is this budget built on?
Why ask it
Ask for the three or four that move the total most, usually income, headcount, prices and volume, and write them down. Every later question in the meeting is a test of one of them, and at the first review they are what you check before you look at any line.
Does this budget break even, or does it plan for a surplus or a shortfall?
Why ask it
Find the bottom row before you read any detail. A planned shortfall can be a sound choice when someone can say what covers it and for how long, and a planned surplus deserves a reason too, such as rebuilding a cushion or paying down debt.
How does this budget compare with what we actually spent last year?
Why ask it
A budget set beside last year's budget hides a year of drift. Set beside last year's actuals, it shows what is really being asked for. If the spreadsheet only has budget against budget, get the actuals column added before going line by line.
Where does the income figure come from, and how much of it is already secured?
Why ask it
Have it sorted into three piles: signed or confirmed, likely, and hoped for. Spending that depends on the third pile is the spending to hold back until the money shows up.
Which lines have gone up the most, and what is behind each increase?
Why ask it
Three causes sound alike in a meeting and are not: a higher price for the same thing, more of the same thing, or something new. The first is mostly out of your hands, the second follows from the plan, and the third is a choice this meeting is being asked to make.
What do we know is coming that is not in this budget yet?
Why ask it
Finance can only budget what it has been told about, so this is as much a question for the people around the table as for whoever built the sheet. A planned office move, a system at the end of its life or a round of raises nobody has priced all belong on the page, even as a rough figure with a question mark.
Was this built from last year plus a percentage, or from what the work will cost this year?
Why ask it
Last year plus a percentage is quick and carries every old habit forward unexamined. If that is how it was done, pick the two largest lines and ask for those to be rebuilt from nothing, which is manageable where redoing the whole budget is not.
What price increases have we assumed for suppliers, rent and pay?
Why ask it
One flat percentage across everything is a placeholder. Some increases are already known, such as a step written into the lease or a raise that has been agreed, and the rest are guesses, so have the two kinds separated and find out what the guesses rest on.
How many people does this budget assume, and in which month does each new hire start?
Why ask it
Staff cost is often the biggest line, and its size turns on start dates more than on salaries. A hire budgeted from the first month who arrives in the fifth leaves money unspent that someone will be tempted to treat as spare. Check too whether the figure includes the costs that sit on top of pay, and ask what those are here.
Which single assumption, if it turned out wrong, would change the total the most?
Why ask it
Whoever built the budget usually knows the answer at once, and it is rarely the line the meeting has been arguing about. Have the total rerun with that one figure ten percent worse, so everyone can see how much slack there is.
Does this include a full year of costs we only paid for part of last year?
Why ask it
A hire made late in the year or a lease signed mid-year cost a few months last time and will cost twelve this time. It explains many increases that look alarming at first glance, and it is the first thing to check when a line is up and nobody remembers deciding to spend more.
Last period
Where were we furthest over budget last period, and why?
Why ask it
Rank them by amount, not by percentage: a small line that doubled is a distraction beside a big one that ran five percent over. For each of the top three, the useful part of the answer is whether the cause was price, volume or a decision somebody made.
Where did we underspend, and was that a saving or work that did not happen?
Why ask it
An underspend gets applause it has not always earned. Training not booked, a position left vacant and maintenance put off all look like savings on the page and come back later as a bigger bill, so find out what was not done.
Which of these variances are timing, and which are permanent?
Why ask it
A bill that landed a month early will even out by year end, while a price rise will not. Have finance mark each variance one way or the other, then set the timing ones aside and spend the meeting on the rest.
Which of last period's overruns have been built into the new budget, and which are we assuming will not happen again?
Why ask it
Either choice can be right, but it should be a choice. If an overrun is assumed to be a one-off, the follow-up is what has changed to stop it, because 'we will be more careful' has no cost and no owner.
Could any of this variance be a cost coded to the wrong line or the wrong month?
Why ask it
Worth asking before anyone is called on to explain an overspend. A line that is over by roughly the amount another is under is the usual sign, and a recode fixes both without a debate.
How close was last year's forecast to where we finished?
Why ask it
The size and direction of the miss tell you how to read this year's figures. A team that lands under budget year after year probably has padding in its estimates, and one that keeps running over may be budgeting on hope. Neither is a criticism of finance, which can only work with what budget holders send in.
What one-off items are sitting in last period's numbers?
Why ask it
A refund, a grant that will not repeat, a legal bill or a single big repair all bend the comparison. Last period with those stripped out is the base the new budget ought to be measured against, so have that version produced.
Fixed or flexible
Which costs are committed whatever happens, and which could we still change?
Why ask it
Rent, loan repayments, salaries and signed contracts are decided already, so discussing them is commentary. Have the page split into committed and open with a total for each, and you will usually find the real decision covers a much smaller sum than the headline figure.
Which contracts come up for renewal this year, and when is the notice date for each?
Why ask it
The notice date is the one that matters, because it can fall weeks or months before the renewal itself. Get a list with both dates and put the notice dates in a calendar that somebody checks, since the terms differ from contract to contract.
When did we last get a competing quote on our biggest supplier costs?
Why ask it
Recurring contracts tend to renew at whatever the current supplier proposes, with insurance, freight, cleaning and software the usual examples. Pick the two or three largest and agree who will get a second price before the notice date. Even if you stay where you are, the quote gives you something to negotiate with.
Which costs rise and fall with how busy we are, and which stay the same if we do less?
Why ask it
This tells you what a slow quarter would do. Where most costs stay put, a drop in income falls almost entirely on the bottom line. Where they move with activity, the damage is smaller, though so is the upside when business picks up.
Which subscriptions, licenses or retainers has nobody reviewed in the past year?
Why ask it
Finance can see that a payment goes out every month but usually cannot tell whether anyone still uses the thing. List the recurring payments by supplier and take ten minutes to put a name against each one. The ones nobody will claim are the easiest cuts in the budget.
If one line is underspent, can the money be moved to another, and who has to agree?
Why ask it
Organizations differ a lot on this, and some funders or boards forbid it for certain lines, so ask how it works here before you count on it. Knowing the rule early stops a manager from overspending one line in the belief that a saving elsewhere covers it.
Does unspent money carry over into next year, or is it lost?
Why ask it
Where it is lost, expect a rush of spending in the final month on things nobody needed in the first eleven. If that is the rule here, see whether a planned purchase can be brought forward openly, which beats a hurried one.
Which costs are allocated to us from elsewhere, and how is our share worked out?
Why ask it
A department can be charged for rent, IT or central staff by headcount, floor space or some older formula nobody has revisited. You cannot manage a cost you do not control, so have those lines shown apart from the ones your team can move.
Cash and timing
In which months does the money actually go out?
Why ask it
An annual total divided by twelve is the default and is rarely how spending falls. A budget phased by month is what makes the monthly reports mean anything: without it you will be 'under budget' until the big bills land and 'over' the month after.
Which months are tightest for cash, and how low is the balance expected to go?
Why ask it
A budget can balance over the year and still run short in a particular month. Get the low point as a date and a figure, then the plan for it: a reserve, a line of credit or a payment moved.
When do we expect the income to arrive, and what happens if it comes a month or two late?
Why ask it
Invoices, grants and fees usually sit in a budget in the month they are due, and reach the bank when the payer gets around to it. The late version of the cash plan is the one to keep handy, because payroll and rent go out on the day regardless.
Which large payments fall in a single month?
Why ask it
Insurance, annual licenses, tax bills, deposits and bonuses are the common ones. None is a surprise, yet each catches someone out, so have them listed with their months and check the list against the tight months you have just heard about.
Is this budget on a cash basis, or does it count costs when they are incurred?
Why ask it
The two can give quite different pictures of the same month, and neither is wrong. Ask which one this is and which one the monthly reports will use, because comparing a budget kept one way with actuals kept the other produces variances that are not real.
What capital spending is in here, and how is it being paid for?
Why ask it
Equipment, vehicles and building work are often kept on a separate page from running costs, which makes them easy to miss. For each item, find out whether it is paid from reserves, borrowing or a lease, and whether the repayments or running costs that follow have been added to later years.
What reserve or cash buffer will we have left at the end of the year if this goes to plan?
Why ask it
The closing figure is the plainest test of whether the budget is affordable. Ask what level the organization aims to hold and who set it, then whether this budget moves toward that level or away from it.
Trade-offs and risk
Which spending here is tied most directly to our main goal for the year?
Why ask it
If the stated priority is growth, or retention, or a new service, you should be able to put a finger on the lines that fund it. When you cannot, either the goal or the budget is not the real plan, and it is fair to ask which.
For the biggest new items, how will we know by mid-year whether the money is working?
Why ask it
Give each new hire, campaign or system one number and one month in which to check it. Spending with no test attached tends to be renewed the next year simply because it was there, and by then nobody remembers what it was meant to change.
What are we choosing not to fund this year, and what will that cost us later?
Why ask it
Every budget has a list of things that did not make it, and it is rarely shown, so request it. Deferred repairs, replacements and training in particular tend to return at a higher price, and the group should accept that knowingly.
If we had to cut ten percent, what would go first?
Why ask it
Better answered in a calm planning meeting than in the week it becomes necessary. A ranked list is the goal, and an equal trim off every line is the answer to push back on, since it treats the essential and the optional alike.
If there were ten percent more, where would it do the most good?
Why ask it
The mirror of the cuts question, and often the more revealing one. It shows what the people closest to the work think is underfunded, and it gives you a ready answer if income comes in ahead of plan.
What is the biggest risk to this budget?
Why ask it
A good answer names one thing with a rough size on it, such as a contract up for renewal, a grant decision or a key supplier's prices. 'Nothing major' from the person who built it is a reason to put the question again to the people who will spend it.
Is there a contingency line, how big is it, and who can release it?
Why ask it
With no rule attached, a contingency goes to the first person who overspends, so find out what it is meant for and who can sign off on it. If there is none, check whether the cushion has been spread through the individual lines instead, which makes every one of them harder to read.
How far behind on income would we have to be, and by which month, before we change the plan?
Why ask it
Agreeing a trigger in advance, such as a set shortfall at the end of the first quarter, turns a slow slide into a decision with a date on it. Settle who makes the call when it is reached, and point back to the ranked list from the ten percent question so the cuts are not argued out with the shortfall already under way.
Who owns it
Who owns each line once this is approved?
Why ask it
One name per line, and a person, never a department. An owner is someone who sees the line's figures every month and can say no to spending against it. Any line without a name is the one to expect trouble from.
Before we approve it, what exactly are we approving: the total, each line or the plan behind it?
Why ask it
Board members and owners should settle this before the vote. Approving a total usually leaves management free to move money between lines, while approving line by line usually does not, and practice varies from one organization to the next. Have the answer recorded in the minutes.
What can a budget holder approve alone, and what needs a second signature?
Why ask it
The limits differ everywhere, so ask what they are here and where they are written down. A new team lead in particular should leave knowing the amount they can commit without asking, and who to go to above it.
How often will we see actual spending against this budget, and how soon after the month closes?
Why ask it
A report that arrives six weeks late describes a month nobody can change. Pin down the date as well as the frequency, and the layout too: a single page showing budget, actual and variance to date is enough for most people at the table.
At what size does a variance need explaining, and who to?
Why ask it
Set a threshold as both an amount and a percentage, so a tiny line that doubles and a huge line that drifts are each caught. Without one, reviews either chase small differences or wave everything through.
When will we reforecast, and what would make us do it early?
Why ask it
In most setups the budget stays fixed as the yardstick while the forecast is the updated guess at where the year will end. Get the dates, plus one or two events, such as losing a major customer or funder, that would prompt a fresh one at once.
How do we handle a cost that comes up mid-year and is not in the budget?
Why ask it
It will happen, so learn the route here: who the request goes to, what it needs to show, and whether it comes out of contingency or another line. A known route is what keeps unplanned spending visible.
What do you need from me before this is final, and by when?
Why ask it
Ends the meeting with a job for each person in it. Usually the answer is a quote, a start date or a decision somebody has been sitting on, and supplying it makes finance far more willing to take your questions next time.
How to get more out of a budget meeting
Practical guidance for the conversation itself
With the budget packet in front of you
Get the packet early and read the total last
Ask for the budget packet a couple of days ahead. A sheet seen for the first time on a shared screen cannot be questioned properly. Start with the three largest lines and the three that moved most since last year, and leave the total until you understand those. Most of the money, and most of the useful questions, tend to sit in a handful of rows.
Work out which meeting this is
A planning meeting on a draft is the place for Assumptions and Trade-offs and risk, while the numbers can still move. A review of the period just ended belongs mostly to Last period. An approval meeting is late for redesigning anything, so there the questions that count are the ones under Who owns it, plus any assumption you still do not believe.
Bring what the sheet does not know
A department head or team lead knows things finance has not been told: a hire that has slipped, a supplier who has hinted at a price rise, a project about to finish early. Note them next to the lines they touch. The person who keeps the books would much rather hear them in the meeting than discover them in the third month.
Choose six or seven questions
Nobody gets through this whole list in an hour, and trying would turn a review into an interrogation. Take one or two from each group, weighted toward your own seat, and put first the one whose answer could change how you vote or what you commit to.
What to ask from each seat
Department heads and team leads
Your lines are a small part of the whole, so stay on them. Fixed or flexible tells you how much of your budget you can really steer, Cash and timing explains why a reasonable request gets a no in certain months, and the questions about sign-off limits and unplanned costs are the ones you will use every week afterwards.
Owners working with a bookkeeper or accountant
In a small business the budget is often one person's spreadsheet and the meeting is two people at a desk. The cash questions matter most here, since the owner is usually the contingency. Ask for the low point of the bank balance first, then work back through the assumptions that produce it.
Board members and trustees
A board looks after the shape of the budget, and management looks after the lines. Stay with the assumptions, the bottom line, the reserve, the biggest risk and what exactly is being approved, and resist the pull of a small line you happen to know something about. If a detail does trouble you, ask for a note after the meeting.
Asking so that finance stays on your side
Question the figure, never the person who typed it
Whoever built the budget assembled it from what other people sent in, often late and often incomplete. 'What is this number resting on?' gets a fuller answer than 'why is this so high?', and it keeps the person with the most knowledge at the table willing to share it.
Ask for an amount and a date
'Costs are up a bit' and 'we should be fine on cash' are where budget conversations go soft. A follow-up asking how much and by when is nearly always enough. If nobody has the figure with them, agree who will send it and carry on.
Speak when the line is on the screen
When a line passes without comment, the group has accepted it. If you have a doubt, say so then, even in a sentence. Raising it three months later, after the money is committed, helps no one.
Park the single invoice
One transaction or one supplier can swallow twenty minutes of a budget meeting. If your question concerns a single payment, take it to finance afterwards and keep the meeting for anything that changes a decision.
Once the budget is agreed
Keep the list of assumptions
Write down the handful you were given under Assumptions, with the date. At each review, check those first. When an assumption has broken, the variance that follows needs little further explanation, and the conversation can go straight to what to do about it.
Turn the answers into reminders
Contract notice dates, the tight cash months, the reforecast and the reporting dates all came out of the meeting as answers. They are only useful once each one sits in a calendar with somebody's name against it.
Bring three questions back every time
The first monthly or quarterly review is a shorter version of this meeting. Timing or permanent, saving or work not done, coded to the right line: those three from Last period cover most of it, and asking them at every review teaches budget holders to arrive with the answers.