Budgeting – it’s not the most fun time of the year, but we all have to do it. Did you know that one in five Americans would rather spend an hour in jail than plan out a 5-year budget? So why is this? The Strategic CFO published a great article on business budgeting, and how to improve the process. First, let’s discuss some common problems when faces with building a corporate budget.
- The whole process is complex and takes too long
- Established budgets favouring one department over another can cause friction/tension between groups and departments
- Employees don’t follow it, or find ways around it
- Lack of accountability and follow-up
Getting buy in from all employees and departments is important. Without working together, the whole process will certainly take longer than it should, leading to lost time and productivity. As well, if accountability is lacking, it is likely that employee and department efforts to stay on track will likely reflect this as well. Accountability helps breed consistency and alignment, which further leads to and encourages accuracy.
So how can the budgeting process be made simpler and more enjoyable for all? Here are some tips to get you started:
- Be realistic – set goals and objectives that promote growth and efficiency, but make sure they are attainable. Setting an unrealistic goal/budget can be demoralizing and lead to loss of productivity.
- Promote communication – building a budget takes a team. Maintaining open and regular lines of communication will help ensure everyone is on the same page when making large joint business decisions, such as budgetary planning.
- Make sure your data is current – how often do you update your data and is there a process in place to make sure it is current? Using out-of-date data, even if it is only a couple months old, can drastically complicate and change business planning.
- Hold yourself and others accountable – the budget is a guideline and plan to help your business run efficiently. If budget guidelines aren’t followed, this can affect other areas of your business.
An effective budgeting and forecasting process is crucial. With True Sky, our sophisticated data tools, security settings, audit trails and integration with various ERP systems can help hold your team accountable to their numbers and simplify your budgeting process. Find out more at www.truesky.com or call 1 855 878 3759 to get in touch with us today!