Infographic: Better Business Budgeting
Posted on: December 8, 2021
The long-term success of your organization depends on the success of your budgeting. It’s critical your business plans for the future are based on detailed analytics, taking into account where you’ve been and where you want to go financially.
Organizations can’t afford to rely on “old-school” methods of incremental budgeting in spreadsheets, whereby previous years’ results are simply adjusted by a percentage, leaving business leaders to just cross their fingers and hope for the best. These methods are inaccurate, don’t account for changing market conditions, and are more susceptible to misuse by departments which over-budget simply to be safe.
There’s a better way to business budgeting.
What Is Business Budgeting?
It’s the detailed roadmap for achieving your company’s objectives and goals. Your budget should project, forecast, manage, and provide critical data intelligence into your organization’s financial health and strategies.
Your business budget should be carefully and accurately constructed across all departments for a specified period of time, including all revenue streams and expenses of your organization. This will ensure your company monitors progress toward all goals, controls its spending, and successfully predicts its cash flow.
1. Predict Cash Flow & Profit:
Cash is King. It’s one of your most important resources and must be managed correctly. This is impossible without a business budget in place.
2. Monitor Targets:
You need all team leaders to clearly understand the business objectives in place so that they can make the best decisions for their team based on accurate data.
3. Obtain Financing for Growth:
Accurate budgeting gives lending institutions confidence in your organization and its leadership. This assurance helps reduce risk and makes getting funding easier at the lowest possible interest rate.
4. Control Spending:
You can’t spend what you don’t have. A successful business budget is one that clearly defines your expenses and controls them based on your profits, providing the metrics to measure team performance and better understand what drives profitability across all lines of business.
5. Prioritize Where to Channel Resources:
Within any organization, competition for resources is inevitable. Every department needs funding for both capital and operating expenses. And usually more than what is available. This makes it critically important that businesses create procedures so that resources are allocated to support key strategies. They must work hand in hand.
Best In-Class Business Strategies
- Make budgeting a priority. Start early in the planning process and make sure your team has interim deadlines to monitor progress along the way and ensure target dates are met. It’s critical you finalize your budget before the end of your year, whether that be fiscal or calendar-based.
- Define clear goals from the beginning. Goals should be made clear at the beginning of your budgeting process. Make sure they are realistic and attainable.
- Don’t budget against your previous year’s budget. Only budget against historical actuals and your current year forecast. Make sure to check your budgets against a lengthy history of actuals. Those historical numbers and trends tell an important story.
- Get buy-in and input from all key decision-makers. You will need to ensure thorough planning and clear communication within and between all departments. This will help drive accountability and create awareness of changes in outside factors.
- Update budgets to actuals. It’s important to compare your baseline budgets to actual numbers. However, your forecasting budget shouldn’t be set in stone. It needs to be flexible to reflect any organizational, economic, or other outside changes.
- Integrate top-down bottom-up approach. This method couples corporate strategic goals with the ability to operationally manage and adjust projections, while using pertinent field knowledge of customer strategies and business drivers. This ensures shared responsibility for budget refinement between managers and employees, with increased involvement, along with improved efficiency and accuracy.
- Implement a budgeting technology solution. This is a critical component of saving time and money, while ensuring budgeting accuracy. You need an automated budgeting solution that directly connects to your database(s)/ERP system(s) and eliminates the need for IT dependence.
How The Right Technology Transforms Budgeting
- Automates Entire Process – Your budgeting, forecasting, and reporting can be accomplished with a few mouse clicks and no headaches.
- Plans for What-If Scenarios – You see the impact of your decisions before you make them. You can generate multiple scenarios and visualize the results of each potential outcome.
- Improves Accuracy – You need a single source of truth. This can only be done by employing a technology solution that brings together all of your data in real-time – including from multiple ERPs, spreadsheets, or other data sources.
- Provides Flexibility – Today’s competitive environment requires you have the ability to quickly and easily change your budgets on the fly.
- Enhances Insights – With all of your data integrated into one system, you have greater insight into the significance your metrics have on your budget. With a meaningful tool, you will automatically get dashboarding and reporting capabilities out-of-the-box, providing a big picture view of the health of your organization, along with a robust analysis of where you’ve been and where you’re going.
- Streamlines Communication – You can’t afford to have silos within your organization. All planning must be aligned across your entire business. An integrated technology solution will provide this, and without you having to leave your desk.
- Gives Deployment Options – You get the ability to use the technology solution either in the Cloud or on-site. This allows flexibility for team members to have access to the same information whether they are in the office or working from home.
The right technology solution, like Synoptix, does the heavy lifting for you, making it easy for you to quickly make the best decisions for your organization.
Download the FREE Better Business Budgeting Infographic Today!
Your organization’s long-term success is dependent on the performance of your budgeting.
It’s vital that your future company plans are built on detailed analytics, taking into consideration where you’ve been financially and where you intend to go.
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.