Many financial leaders dread the annual budgeting process, especially those who rely on multiple spreadsheets, manual reconciliation and data management, and outdated systems and resources.
The struggle to gather necessary, relevant information that informs the annual budget from department heads is real. Furthermore, paper-based systems and outdated collaboration tools that involve excessive back and forth – multiple phone calls, emails, or in-person meetings – often lead to higher costs, man hours, and frustration surrounding the budgeting process.
In the end, the working budget does not accurately represent the current or future needs of the organization. Below we highlight some of the most common challenges businesses face as they prepare budgets for the coming year and some actionable suggestions that will simplify the process.
Different Budgets Require Different Data Collection
Different industries demand different budgeting approaches. For example, the construction industry normally relies on an annual operating budget and project budgets created as part of the project management process. Depending on what type of business you operate, your organization may need an operating budget and/or:
- Department budgets
- Project budgets
- Sales budgets
- Financial budgets
- Cash flow budgets
- Production/Manufacturing budget
- Personnel/Human Resource budget
- Fixed, variable and adjustable budgets
Tips to Simplify Budgeting Season
With so many factors influencing asset allocation planning, it's understandable why financial leaders dredge the budgeting process. Here are three steps you can take today to ensure next year's process will be smoother, more cost-effective, and easier for your team.
Upgrade your systems
Many business leaders today rely on modern, fully-integrated accounting and planning software solutions. Fully-integrated software solutions are available today in both dedicated, on-site options as well as cloud-based systems. Choose the system that fits your organization's needs. An ideal system dramatically improves collaboration, cost control, accuracy, and internal workflow. Plus, there are forecasting and budgeting systems designed to give you the flexibility to expand your granular view as your business grows.
Action: Use the right tools for better outcomes.
Modernize your forecasting model
Twenty, thirty, or fifty years ago, businesses relied on static budgetary guidelines. In today's rapidly evolving marketplace, this strategy is ineffective and often unattainable. Transitioning your company to a rolling forecasting model gives you the agility and flexibility to modify allocations as expectations change throughout the year. Just think about the shock businesses experienced as the pandemic rearranged processes, personnel requirements, and spending.
Action: Consider implementing a working budget that covers shorter terms – quarterly or bi-annual standards based on actual spending and revenue, as well as historical data for fixed costs and income.
Unified systems include functionality that informs real-time decisions. Automation has been shown to save companies between 10% and 50%, depending on how organized and efficient a company was before automating routine tasks and implementing a fully-integrated account management system. Automation reduces or eliminates human error and streamlines financial transaction processing and records management.
Action: Automate every department – from the maintenance team to the C-Suite – and use the data to inform annual budgeting processes, as well as real-time financial health status.
Key Pain Points Eliminated
Along with streamlining budgeting and forecasting activities, reimagining budget season with these four steps resolves many common pain points for business leaders.
- Provides tighter financial control
- Improves cost-containment strategies
- Enhances security
- Enables cost-effective asset allocation
- Elevates employee morale and job satisfaction
- Supports a lean, optimized workflow
- Builds agility and flexibility in budgeting and forecasting
- Delivers valuable insights and quantifiable performance metrics (KPIs)
- Reduces errors
- Creates a unified system that collects, analyzes, organizes, and distributes budget-relevant data in a cohesive budget on-demand
Turn budgeting season into a smooth process that drives growth and profitability
Whether your company is using QuickBooks or another front-end accounting software solution and you also use multiple spreadsheets and manual processing methods to create an annual budget, your company can ditch the frustration that comes along with the budget season.
Taking these three simple steps positions your organization to sail through the season without the hassle and stress you've grown used to. Plus, these three suggestions drive growth and higher profit potential through other areas outside of just budgeting. And that is why you're in business – right? Contact AccountingDepartment.com today to see how our outsourced client accounting services can make life even easier when it comes to reporting and budgeting needs.