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How to Make Your Annual Budget Process more Efficient & Collaborative

August 1, 2023
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Getting ready for budget season is a big task. If you don't handle it effectively, you can struggle through the process of creating a workable budget. It can affect the company's performance all year long. 

Leaders rank budget season far down on the list of their favorite times of the year. It's rarely fun. It can be tedious, irritating, and time-consuming to arrive at a solid budget. But the annual budget process is too critical to ignore, and can't be blown off.

The best approach to creating your annual budget is to find ways to make it as painless as possible. The efficiency of the annual budgeting can be dramatically improved by creating a proactive plan.

9 ways to make your annual budget process more efficient and collaborative 

1. Adopt a driver-based budget

Even the most well-considered budgets will need to change over the course of a year. External, unforeseen factors can be expected in advance, but their impact can't be completely determined until they happen. A rolling budget alleviates the pressure leaders inevitably feel about setting a plan in stone. This strategy reduces the overall resources spent on the annual budgeting process, and it produces a more accurate, valuable budget. 

2. Review past budget performance

The best indicator of future performance is past performance. There's a goldmine of helpful budgeting data in last year's budget. Gather the prior year (or two) of budgeting information into a report. Dig into the spending and decide whether each line item was necessary. From there, start building the expenditures that must be repeated and add new ones. 

Looking at previous budgets keeps budgeters from having to start from scratch every year, and gives them a skeleton of the budget they must create. 

3. Secure stakeholder buy-in

A good budget is born from the work of multiple people. Don't make the mistake of having only a couple of people create the budget, then springing it on everyone else. The results won't be good.

Pulling in the right contributors is essential for getting the information you need and avoiding issues that hold up your budgeting process. Reach out and involve them early in the process, and set a timeline of what you need from them. By being involved and empowered to add their contributions on the front end, everyone will be more likely to accept the budget when it's delivered. 

4. Create accountability

Stakeholders should have ownership of their parts of the budget from the beginning. Otherwise, there will be inconsistent results and holdups that could derail the project. Schedule a kick-off meeting to get stakeholders engaged in the upcoming process. As soon as leaders inform team members they'll be involved in the budget, they should share their expectations and overall goals, including measurable key performance indicators (KPIs).

Encourage everyone to hold themselves accountable for delivering their part. If you're using a project management system, assign everyone their roles and tasks to create a transparent environment, and to keep track of progress. 

5. Use technology to streamline the annual budgeting process

Financial planning and analysis software can greatly streamline and speed up the annual budgeting process. Here are some of the major benefits of using FP&A software for your budget:

  • Add automated tasks that cut down on time-consuming, repetitive work
  • Reduce human data entry errors
  • Quickly run multiple scenarios
  • Safeguard the budget data
  • Streamline workforce planning
  • Increase collaboration among on-site, hybrid, and remote team members 

Technology improves productivity and collaboration, and decreases human error. The better a company's tech stack, the easier its budgeting becomes. 

6. Establish a single source of truth

As the budget takes shape, there will probably be multiple people who need to sign off on it. Avoid sending out (and getting sent back) multiple versions of the plan. Handling it this way adds confusion and creates version control issues. When creating a budget, you should never have to ask yourself whether you're working from the latest copy.

Consolidate information into a single location that every stakeholder has access to, even if it's limited by their role. By reducing the time it takes to track down the correct version, everyone enjoys increased visibility into the budget and saves time on their portion of it.

7. Set specific benchmarks

Shorten the time it takes to deliver a budget by setting comprehensive benchmarks. There are several benefits to benchmarking: 

  • Keep everyone aligned on company goals 
  • Create transparency in how performance will be measured 
  • Help management properly manage tradeoffs in resource allocation
  • Provide more context for higher-level stakeholders, like the C-Suite and Board of Directors) who may not be directly involved in the budget

Using benchmarks keeps everyone focused on the goals and informed of the specifics, helping avoid vague direction that thwarts progress with the budget. 

8. Encourage cross-departmental collaboration

Good budgets aren't created in silos. If stakeholders have a way to communicate with one another easily, they will be more engaged in the process. Increase stakeholder communication by: 

Scheduling brainstorming meetings: These sessions give each individual a platform to make their voice heard, share ideas, and develop answers to broad problems. 

Setting up a feedback strategy: Whether it's a thread in your company's communication platform or another channel, making it easy for stakeholders to share feedback during and after the process helps increase budgeting collaboration. Leaders should monitor and use the feedback as needed to create a more accurate budget.

Fostering an inclusive environment: From the beginning, every stakeholder should feel like their input is heard and valued. Otherwise, the less-forthcoming team members may hold back on ideas and solutions that would have been positive contributions. 

9. Address obstacles immediately

As budget season progresses, it's vital to watch and measure progress. Technology is key in offering timely ways to monitor progress. Keeping a watchful eye helps pinpoint potential issues early. Analyze data in numerous ways to find potential discrepancies or bottlenecks in the budgeting process. 

Once you identify issues, communicate with the stakeholders involved to discuss the problem and figure out a way around it.

The annual budget process CAN be efficient and collaborative

Budget season doesn't need to be overly tedious or time-consuming. By embracing technological assistance, starting early, and clearly identifying stakeholders and their roles, you can decrease back-and-forth disagreements and avoid obstacles before they become big problems. A collaboratively built, driver-based budget is more streamlined and effective for the entire organization.

Book a demo to see how Centage's FP&A software streamlines stakeholder collaboration and speeds up the annual budgeting process.

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