Top 6 Steps to Better Corporate Budgeting
Budgeting is a necessary evil. And in today’s fast-paced digital marketplace, it’s more important than ever. It’s the roadmap for the financial operations of your company. The roadmap you simply can’t do without.
Budgeting is not a wasted bureaucratic exercise, although it may feel like it at times. Your finance team must be in the driver’s seat to create a budgeting process that will keep your business, and its finances, on track.
We need budgets in order to monitor progress toward our goals, help control spending, and predict cash flow and profit. This process often involves a significant number of Excel spreadsheets, several cups of coffee and plenty of headaches.
One of the biggest challenges we face in budget planning is simply mapping out the future effectively, understanding that it can’t ever be done with perfect precision. However, there are some standard best practices to ensure you have the best chance of hitting your targets.
1
Make Budgeting A Priority
Start early in the planning process and make sure to have interim deadlines. You’ll need to monitor progress along the way and ensure target dates are met. It’s imperative you finalize your budget before the end of your year.
2
Set Up Budgets Correctly
Don’t budget against your previous year budget. Only budget against historical actuals and your current year forecast. You’ll want to make sure to check your budgets against a lengthy history of actuals. Those historical numbers and trends tell an important story. Be sure to include your operational team in preparing budgets as well, to help drive accountability and create awareness of changes in outside factors.
3
Improve Visibility Into Your Performance
- Ensure the decision-makers have visibility into the company’s overall performance.
- Determine who needs to see what analysis and in what detail.
- Determine your Key Performance Indicators.
- Layout what drives revenue & profitability.
4
Update Your Budgets To Reflect Reality
It’s important to compare your baseline budget to actuals. However, your forecasting budget shouldn’t be set in stone. It should be flexible as to reflect any organizational, economic and other outside variables. If you have a software reporting solution which connects directly to your database, you’ll be able to compare your real-time actuals with your budgets.
5
Maintain A Flexible Budget To Account For “What-If” Scenarios
Again, if you have a robust reporting tool, you’ll be able to create multiple scenarios and see how those each would impact your company overall. This provides the greatest impact, for example, on how to handle a turbulent year.
6
Implement Technology
If you are still using Excel spreadsheets, save yourself time, headaches and money and implement a financial reporting solution which will connect directly to your database and allow your average users to create their own budgets and reports. It’s important you find a solution, such as Synoptix, that doesn’t require your team to depend on IT or in-house experts. Users need to be able to create their budgets and reports when they need them. Not be chained to when a technical support expert can get around to it.
Jeana has been in the software industry for 15+ years specializing in ERP reporting solutions. She has decades of experience in creative content development and marketing and enjoys exercising, traveling & spending time with her husband & twin boys.
