The pressure is on to deliver a 2026 budget plan that’s not only accurate but flexible enough to adapt to change. Finance teams are expected to align with leadership priorities, navigate shifting market conditions, and make sense of data across departments, all while meeting tight deadlines. In the scramble, even the most experienced professionals can fall into common traps that can lead to wasted time, misaligned goals, and budgets that quickly become outdated.

The good news? These mistakes are avoidable with the right mindset, processes, and tools.

Here are five budgeting traps to avoid this planning season, and what to do instead.

1. Planning in an internal silo

Finance teams know that budgeting can’t be done in a vacuum, and they’re used to involving stakeholders and department leaders early in the process. That encourages collaboration and transparency, keeps people invested in hitting the targets they helped set, and ensures the budget reflects companywide priorities. But are you taking full advantage of external data sources and groups?

As an example, the Bureau of Labor Statistics provides data on inflation levels, unemployment rates both national and where you operate, and wage trends. All are useful for forecasting labor costs. Regional organizations may provide more granular data on the local economy and business climate. If you sell heavily to one industry, how are these customers likely to fare in the next year?

Also consider doing some competitive analysis. Sector-specific reports, market research studies, and whitepapers can provide valuable insights into expected growth rates in your industry as a whole and potential market opportunities or challenges. By checking out your main competitors’ websites, press releases, and financial reports if available, you may get an idea of their spending priorities and see whether your budget plan provides the means to compete effectively. For example, competitive intelligence, gathered from earnings calls can reveal whether your budget aligns with—or outperforms—peers’ strategies.

2. Starting too late

Waiting until the last minute to begin budgeting can lead to rushed decisions, disjointed inputs, and a lack of proper analysis. It also increases the chances of burnout as teams scramble to meet deadlines. So, start early and build a timeline with clear milestones. This gives teams the breathing room to gather a wide range of data, model scenarios, and have meaningful conversations before locking in assumptions.

Many companies have a formal process for regular budget reviews and feedback loops throughout the year. They’ve established mechanisms for resolving conflicts that may arise and for highlighting successful initiatives and showcasing their impact on the company’s financial performance. Consider appointing budget coordinators or mediators who can facilitate discussions, help find common ground when departments have conflicting priorities or resource requirements, and lead analysis of the budget’s effectiveness.

And of course, by treating budgeting as an iterative process rather than a yearly exercise, these organizations avoid starting from scratch each cycle. Instead, they refine rolling forecasts, adjust for new data, and use scenario planning to stay agile. This approach not only minimizes year-end surprises but also ensures resources consistently support the company’s most critical goals.

3. Relying too heavily on last year’s budget

Using last year’s numbers as a baseline might seem efficient, but it can result in stagnant thinking and budgets that don’t reflect today’s business realities or future risks. This is especially problematic in a climate where supply chain disruptions and trade policy changes, like shifting tariffs, can significantly affect costs and margins.

Our advice is to avoid simply rolling forward line items without taking a critical look at their relevance. A zero-based budgeting mindset can help, because it forces you to rebuild each budget category from zero, requiring fresh justification for every dollar based on current needs and possible future risks. For areas like imported goods or international supplier costs, this approach ensures tariffs and market fluctuations are properly accounted for rather than buried under legacy assumptions. Even if you don’t adopt full zero-based budgeting, applying its principals to high-impact areas forces the kind of rigorous, forward-looking analysis that predictive AI models are designed to support.

Build your budget based on what’s ahead, not just what’s behind.

4. Overcomplicating the process

Endless spreadsheets, version control issues, and unclear templates slow everything down and frustrate everyone involved. Complexity makes it harder for stakeholders to contribute and for finance teams to stay on top of it all. Simplify wherever possible. Use standardized templates, clear workflows, and technology that promotes collaboration and automation. The easier you make it to participate, the more accurate and efficient the process will be.

If you don’t have a standing budget committee that meets throughout the year, consider establishing a cross-functional budget working group of representatives from departments, functions, or business units, including leaders from finance, operations, procurement, and sales. Using cloud-based planning tools can facilitate their work by giving each stakeholder real-time access to the budget and allowing them to collaborate on forecasts, cost drivers, and capital needs without emailing spreadsheets back and forth. By holding monthly check-ins and using standardized templates, the team stays aligned and can quickly adjust forecasts based on supply chain updates or sales pipeline changes. This approach not only improves accuracy but also fosters a sense of shared ownership across the business.

5. Ignoring forecasting flexibility

Static, once-a-year budgets can become obsolete the moment something unexpected happens. Organizations that don’t build in flexibility struggle to adapt. Embrace continuous forecasting and scenario planning. These tools allow finance teams to regularly reforecast based on updated data and shifting market conditions. It’s a more agile and responsive approach to managing business performance. Using AI-powered scenario modeling to stress-test budgets against multiple outcomes, such as a recession, demand spikes, or supply delays, helps prepare for whatever comes next.

While flexibility is important, so are goalposts. Encourage departments to collaborate on choosing key performance indicators (KPIs) and metrics that will be used to measure success and allocate resources accordingly.

Finally, implement a formal process for regular budget reviews and revisions throughout the year. This allows teams to provide feedback on the budget’s effectiveness, reassess assumptions, and adjust spending based on changing circumstances.

How NetSuite Can Help

NetSuite Planning and Budgeting automates labor-intensive planning and budgeting processes, enabling finance teams to quickly and easily produce budgets and forecasts, model what-if scenarios, and generate reports—all within one collaborative, scalable solution. Embedded AI and machine learning automate data analysis to improve and accelerate planning and forecasting cycles. You can create detailed AI-generated commentary and narratives, and by reducing the time spent on manual data collection, reporting, and data loading, finance teams can shift their focus from data entry and formula maintenance to strategic analysis activities that positively impact the company’s financial position.

Instead of juggling disconnected spreadsheets, you can focus on strategic planning and what really matters: driving the business forward with confidence.

Learn more about how NetSuite Planning and Budgeting can help you with your upcoming budgeting season.