Different organizations use different processes and techniques when budgeting and forecasting, but most companies end up making the same mistakes. Read on below to find out what some of the most common mistakes are, and how to prevent them.
Failing to Change with the Times
When were the processes and techniques used to build your budgets first implemented? If you’ve been following the same process for a while because it works, that’s great, however it might be time to consider changing the way you do things. For example, many companies were using annual forecasts for the longest time, but recently, more and more companies are choosing to switch to rolling forecasts. This could help your company better stay on top of any changes within the industry/market you operate in, and identify any potential changes you might need to make to compensate for these changes. Real-time information is becoming more critical and valuable as market changes occur, and rolling forecasts can help.
Failing to Ask for Input
Previously we have discussed differences between top-down and bottom-up budgeting. However, the biggest similarity between the two approaches is that gathering input from each department being budgeted for is necessary. This will help ensure the budget is accurate, and based on operational requirements. Forgoing communication with those who rely directly on the budget may lead to grievances later in the year.
Failing to Hold People Accountable
Without accountability for or commitment to the budget numbers, users may not be as motivated to put forth the effort to follow them. Ensure your employees understand why the budget has been put in place as is, and how each department may rely on another. This can help boost morale and motivation when it comes to budgeting, as well holding each other accountable for the numbers.
Setting Unrealistic Expectations
Quite often, budget contributors aren’t given enough direction or time to complete their budget inputs. As such, this results in a sub-par budget that is filled with errors or is missing information. This then leads to frustrated contributors and finance managers. Ensure you are giving your team clear guidelines on how the budget should be built/defined, as well as give them enough time to complete their inputs with quality.
Regardless of the industry you operate in, budgeting and forecasting are necessary for success. Are your budgets and budgeting processes as successful and accurate as you would like? True Sky can help give your team complete control over the budgeting process. We’ll help give you better visibility, leaving less room for error. For more information, give us a call today at 1 855 878 3759 or visit our website www.truesky.com.