Troubles with Expenditure Planning? 5 Signs Your Broken Budgeting Process Is to Blame
Determine If a Broken Budgeting and Forecasting Process Is the Culprit Behind Your Expenditure Planning Headaches
In its most general sense, expenditure planning is the process that helps you clarify how your company will evaluate growth, decide how human and financial capital should be distributed across the organization, and continuously monitor and update those decisions. Putting together the annual budget is only one small part of the full, expenditure-focused budgeting and forecasting process – but that one piece can feel like it goes on forever.
A lengthy, time-consuming, and exhausting budgeting process indicates a deeper problem. If budgeting is causing your company headaches, it’s probably due to a broken process.
5 Common Issues That Can Ruin the Expenditure Planning Process
When it comes to a broken budgeting process, companies can usually track the problem to one of these 5 key issues.
1. Ineffective Software
Many companies still use Excel spreadsheets for their planning tasks, yet most leaders would be quick to agree that spreadsheets can make consolidations difficult, are prone to errors, contain links that are hard to maintain, and overall can be very, very time consuming to use.
By turning to cloud-based corporate budgeting software, organizations can ensure that they have more efficient tools, fewer errors, less manual work, and better accessibility. Modern, cloud-based budgeting software also allows for version control, makes consolidation seamless, delivers full template control and security, and significantly improves reporting and analysis tasks.
Though it takes initial setup time to create standardized budget entry templates, the time spent is well worth it. Non-standardized templates or templates that differ from department to department can be a hassle to bring together into one master version because aggregation requires careful attention plus a lot of error-prone copy/pasting.
Using standardized and secure templates across the organization speeds up the budget and data-entry processes for all employees. One of the leading benefits of templates is that they can be set up so that employees cannot modify the templates themselves. This significantly reduces data confusion.
3. Unclear Workflows
Workflows are the trusted method of ensuring quality work across a wide range of industries including manufacturing, distribution, and healthcare – which is why successful companies also use workflows to ensure quality in their expenditure planning process.
A good workflow should help budget stakeholders across multiple departments understand:
Who is responsible for each task
What each task is
When tasks are due
Having a clear, deadline-driven workflow promotes transparency and accountability, both of which are critical to ensure a successful budgeting process. Workflows also promote better agility in uncertain times because they enable real-time insight. Finally, strong workflows help speed up the pace of decision making because they naturally work to activate and reinforce approval processes.
4. Long Timelines
The prevailing advice among business experts is to make your goals “SMART”: Specific, Measurable, Achievable, Realistic, and Timebound. Broken budgeting processes do not follow any of those suggestions and instead consider “budgeting” a single, months-long activity. It is not uncommon to hear leaders initiate the budgeting process by sending an email stating, “It is time to start the annual budget; all numbers will be due in a few months for review.” Does this statement follow any of the guidelines for a SMART goal?
A successful budgeting process creates precise expectations using discrete, achievable tasks and clear due dates. As part of your process, determine your timeline and tasks, document each in detail, and communicate your SMART goals for budgeting to all parties involved.
We have already discussed the issue of spreadsheets in the budgeting process, which is why using a purpose-built task manager to organize the planning process can be very useful. To streamline the budgeting process further and enhance security, corporate leaders may want to consider a task manager that is fully integrated into the business budgeting software component of their Corporate Performance Management solution.
5. Placing the Budget in a Vacuum
We all know that a completed budget must be locked down, but this does not mean your expenditure planning process should exist in a vacuum. The shifting, uncertain landscape of the modern business world now requires the flexibility of a continuous budget; we have all seen how quickly a static budget can become obsolete when the whole world changes seemingly overnight.
It is now a business truism that everything can change in a day, which is why successful companies rely on a continuous budget with regular forecasting activities, ad-hoc analysis, and ongoing decision-making sessions. Some modern companies are now engaged in full agility, choosing to entirely replace their budgeting process with forecasting. This activity is made possible by today’s cutting-edge corporate budgeting software solutions.
Strong Process Management Is Critical to Budgeting Success
Processes are powerful. In fact, effective processes are often the #1 reason behind the competitive advantage for many of today’s leading companies. When implemented properly, a strong budgeting process will lead to strong actions and strong results.
By properly using the business budgeting software capabilities included in their Corporate Performance Management solution, most companies can strengthen their financial planning process to achieve a wide range of benefits, including:
Faster, more informed decisions
Significant resource and time savings
Revenue and profit acceleration
You may find it hard to believe, but those benefits are relatively easy to achieve when you fix your budgeting process. A strong, efficient budgeting and forecasting process can be the solution you need to experience consistent, repeatable, positive results throughout your end-to-end planning process.
Solver gives you access to hundreds of financial planning templates and reports, plus our extensive template glossary and experienced staff who are always happy to share their expertise. Solver is committed to helping you with all your planning and reporting needs, so you can proceed confidently into your business’s financial future.