The budgeting and forecasting process is generally not the most exciting time of the year, but there are a few ways to make it simpler for yourself. Read on below to find out if you are making some common budgeting mistakes, and how to avoid them.
Not Asking for Input
Whether your organization uses a top-down or bottom-up approach to budgeting, getting input from various departments and managers is important. This will help ensure your budget is the most realistic, and based on business processes. Without communicating with those whose jobs rely directly on the budget, you may end up causing yourself a lot of headaches. No one likes having to figure out where to cut areas of spending at year end.
Setting Unrealistic Expectations
Ensuring you give your team enough time and instructions on how to complete the budget is key. Without this, there will be limited to no consistency between departments, information may be missing or erroneous, and the whole budgeting process will end up taking much longer to complete than it should.
Making it too Complicated
If input users feel they are presented with too much data, the budgeting process can quickly become overwhelming. Consider using a hierarchical system – does everyone need to see every little bit of data? Likely not. By limiting what data users have access to seeing, you help make sure they are only focusing on budgeting for the areas they need to. This will help simplify the process for all involved, thus also saving the overall amount of time spent on budgeting.
Not Holding Users Accountable for their Numbers
If responsibility isn’t put on contributors for commitment to or accuracy of their numbers, they might not feel overly inclined to put forth their best effort when completing the budget. It is important to make sure that they understand the purpose behind the budget, and any goals that are aligned with it. This can help boost overall accountability and accuracy of the budget.
Failing to Adapt
How long has your organization been using its current budgeting and forecasting process? If it’s been a number of years, you may want to consider changing things up. For example, if you budget annually (as most companies do), you might benefit from transitioning to rolling forecasting. This is becoming a more popular method of forecasting now, as we are in a time when having access to real-time information is becoming more and more critical.
Regardless of your company size or industry, budgeting and forecasting is important for success. Are you making any of the above common mistakes? This may be why your budget isn’t as successful as you’d hoped it would be.
True Sky can help. With a familiar Excel interface, user adaption is quick and easy. As well, our security system and powerful data tools provide you with more flexibility, while leaving less room for error. For more information, get in touch with us today by calling 1 855 878 3759.