In every business, decision making, risk management, cash flow, sales and even human resources all depend on budgeting and planning processes. For nearly every organization, accurate and efficient budget and cash flow processes are essential tools for setting and meeting targets.
These two core functions of the overall budgeting flow are often time consuming and inaccurate. CFOs and budget managers know this is a problem that can lead to bad decisions and missed projections, at the very least.
While many organizations have moved to automate and streamline business processes, these functions are often left behind.
It is any wonder those involved in the budgeting and forecasting process struggle?
The good news is there are solutions—taking a critical eye to your organization’s entire budgeting and forecasting processes can make the difference.
In this post I want to offer a few ideas and best practices your business can use to improve your budgeting flows.
Take the 30,000-Foot View
When we’re in the midst of budgeting and forecasting throes, it can be hard to take a step back and analyze the processes. But doing so will identify bottlenecks or inefficiencies.
Once your current budgeting and forecasting cycle comes to a close (or during downtime if you use a rolling process), schedule time to document the entire process. It’s a good idea to get feedback from key stakeholders in other departments as well as other members of the accounting and finance department.
Note where problems most often occur, understand where personnel is spending the most time, and see what areas can be accelerated. Taking a hard, systematic look at the process as a whole can help you identify fixes.
By no means does this have to equate to a complete overhaul, but a few key tweaks in the process can dramatically improve performance over the long run.
Not everything in the budgeting flow can be automated, nor should it. However, if you struggle during the budgeting and planning processes, it’s likely your business isn’t using employees effectively.
Much of this ineffectiveness can be attributed to the data collection and entry process. Many CFOs and budget managers report that their employees spend the vast majority of their time during the budgeting process entering data. While the ability to collect and process information is more important than ever, key employees should be focusing on analysis and identifying potential risks and opportunities.
Here’s where automation can help. Incorporate systems that can quickly collect the reams of big data organizations see every day. These systems can also provide up-to-date and accurate information at any moment.
Those ‘smart CFOs’ who insightfully use automated systems as a vital tool in their arsenals do so to their advantage, using staff for analysis rather than data entry.
Focus on What Matters
From the largest of Fortune 500 corporations to the smallest shops, businesses today understand the amount of data available at their fingertips. All this information offers an incredible opportunity for organizations to analyze performance.
But while all this data can feel like a huge benefit, the sheer fire hose-like flow of information can prove to be a challenge as well. This is where CFOs and budget managers would be well-served to discern key performance indicators (KPIs) from the information that matters less.
Spend time with your firm’s major decision makers to determine the financial and non-financial KPIs crucial to your organization. The CFO can then use the KPIs with the management team to track business performance. The KPIs should be the primary focus moving forward.
While other information should be collected and used in the analysis, a tighter grip on the data used to measure business objectives should be the primary goal.
While budgeting and financial forecasting processes are known issues in many organizations, they doesn’t have to be quite as frustrating and ineffective.
There are practices you can put in place to improve information collection and streamline the operational flow. These changes, even at the smallest level, can lead to more accurate data analysis and better decision making over the long run.
To learn more about budgeting best practices that your organization can implement, register for an upcoming webinar. In it, you’ll learn about proven, workable frameworks for improving the budgeting process. Click here to register.
Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.