2018 is fast approaching, and many companies are gearing up for an ambitious fiscal year. The economic outlook is good, and a tax bill will slash corporate taxes, giving businesses the fuel they need to invest in their businesses.
Your budget model will play a critical role in the quarters ahead. It will allow you to monitor performance to plan, and warn you if market conditions or other surprises will require you to change your assumptions, or reallocate headcount.
Is your business budgeting software up to the task? Here are five critical requirements of a budget platform to ensure it can scale up as your business grows.
Easy Year-Round Financial Forecasting
All CFOs should compare actuals, budgets and forecasts on a consistent basis, whether that’s weekly or monthly. This allows for a more accurate budgeting process and can highlight potential risks as well as opportunities that lie ahead. The more frequently you forecast, the sooner you can identify instances where you’ll need to rejigger headcount or resources to meet your plan.
But that requires a budget model that has built in intelligence that alleviates the programming burdens on your end. That’s where a Smart Budget excels. Smart Budgets offer pre-programmed business logic and accounting rules to streamline your workflows and add significant accuracy to your models while also allowing you to make changes as often as you need, quickly and easily. This contrasts with the spreadsheet model, which requires the finance team to define the underlying formulas that drive the calculations.
Because Smart Budgets operate as an extension of the general ledger, budget-versus-actual analysis is constantly available.
Collaborative Business Budgets with Buy-In from All Contributors
In periods of growth, budget buy-in from the entire company is essential. After all, a budget is more than just a set of numbers, it’s a vision for your company, and what you hope to achieve in the coming year.
Your budgeting software should allow each contributor to enter relevant financial information and transactional data and ensure those inputs automatically ripple through the budget, updating all relevant fields, accounts, ledgers and so on.
Smart Budgets do this very well. They automatically link each contributors’ data into the same cloud-based, centralized relational database so everyone sees the same financial data, or whichever portion of the data they need to see. That extends from the most meticulous operational details to the highest consolidated rollups. The financial staff and C- level executives have comprehensive information from every corner of the operation, always updated in real time without manual collection and consolidation.
Self-Serve Reporting with Smart Budgets
CEOs and Boards of Directors want weekly, or at least monthly reporting but at the same time, CFOs want to get out of the reporting business. Which is why your budgeting software should offer a suite of self-serve reporting.
Smart Budgets are a good option, because they can mimic the familiarity of a spreadsheet, and provide an extensive library of ready-to-use reports, as well as customizable reports to meet specific requirements:
- Synchronized income statement, balance sheet and cash flow statements
- Presentation-style reports for the boardroom
- Drill-down reports – to see detailed transactions
- Dashboard reporting – for a snapshot of key performance indicators
- Custom “report books” for specific users
Another key element to Smart Budgets is the way they create role-based “views” for each user. What your VP of Marketing sees will be very different from what your VP of HR sees.
Pre-Programmed Business & Accounting Rules for What-If Scenarios
While the economic conditions look good, there is still a great deal of uncertainty in the markets. Throughout 2018 you will probably want to test multiple what-if scenarios. Your budgeting software should streamline that process.
Smart Budgets that offer pre-programmed business logic and accounting rules streamline your workflows, add significant accuracy to your models, and let you manage your budget model quickly and easily.
These features allow you to test multiple what-if scenarios because every aspect of the model automatically conforms and the coding behind them will never break.
Let’s say your CEO believes that by closing the New England division the company will have the cash to expand the West Coast division, and ultimately generate more revenue. A Smart Budget lets you test that assumption (or what-if scenario) by simply deleting the New England division from the model and adjusting the additional expenses for the West Coast. It does not require modifying the underlying model to ensure that formulas are still accurate. Simply Delete and Add and the model adjusts itself.
Combined, these pre-programmed rules promote maximum flexibility, allowing you to apply them wherever needed. This means you can test any scenario or plan with full confidence that your Smart Budget will always create accurate forward-looking balance sheets, cash flow statements, P&L projections and so on, that are synchronized to your underlying budget.
Incorporate Data from Other Systems
Chances are your company uses a CRM or HR system, which tracks highly detailed information about your sales and personnel. For instance, Salesforce allows you to track a wide variety of metrics that directly impact your revenue and projections, giving you the opportunity to forecast revenue — and track your performance — more accurately than ever before possible.
Your budgeting software should allow you to incorporate this data directly into your budget model, so that your budget model is always accurate and assumptions and business drivers are updated as your business changes.
By integrating the robust data generated by your other business systems, you can have a higher confidence in your forecast, and be more assertive in your assumptions.
Businesses of every description rely on the Budget Maestro™ family of Smart Budget 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.