19 Sep Streamlining the budget process
An enormous amount of time and energy goes into most companies’ budget process. Most of this time and energy is spent collecting and processing data and massaging it into consistent formats.
A large number of organisations use manual spreadsheets and practices that make creating a budget manual, prone to error and frustrating for everyone involved.
Here are some steps that can help to streamline the process and eliminate some of the pain involved:
- Keep your eye on the corporate strategy Because the budget expresses how resources will be allocated and what measures will be used to evaluate progress, budget development is more effective when linked to overall corporate strategy.
- De-stress your budget process. Within any company, competition for resources is inevitable. Resource allocation is part science, part art. Coordinating the review of operating and capital budgets will give managers insight into the ways in which changes in one budget affect the other. One such measure is using cross-functional teams to examine action plans.
- Align technology to the strategy. You may need to arrange financial and other solutions to include and report on vital information related to your strategy. Consider integrated tools made to streamline, simplify and automate your budgeting. Your company will benefit from a common budgeting tool that works with existing systems to combine all financial data and tasks in one space.
- Improve visibility into your performance. Organisations should consider implementing a performance-based framework that allocates resources to specific objectives or activities based on appropriate metrics; ultimately, this framework provides increased visibility into how financial decisions translate into results.
- Add non-financial measures to your budget tracking processes to increase understanding of the real business drivers. Other indicators, such as key performance and operational measures, as well as outside factors, such as economic and market conditions, should always be taken into consideration.
- Remove excessive detail. Match the level of detail with your predictive capabilities. Detail does not always equal accuracy – too little or too much can both have negative impacts on the budget process.
These tips can improve the budgeting process and save time and energy. The key is aligning your budget with a broader organisational strategy and using the right solution to keep your team on track.