It’s almost that time of year few claim as their favorite—annual planning and budget building.
Finance departments typically spend at least a month to complete the process of helping the business allocate funds for the coming year, including negotiating and securing all necessary buy-ins and approvals. Many managers take even longer. Forecasting and budgeting don’t always have to be such arduous, time-consuming tasks, though.
Here are four tips for accelerating your 2020 budget process:
1. Set clear objectives and prioritize communication
You need a clear understanding of where your business hopes to be and how it intends to get there to effectively create a budget that supports your objectives.
If, for instance, your business is in scale-up mode, you can create a budget that establishes your group’s priorities, allocates resources and controls costs to help support and drive anticipated growth.
Start by assigning specific ownership of the budgeting process to someone in your department. Ensure that he or she has a plan, involves all necessary contributors and stakeholders, and holds each person to hard due dates.
Contributors need to know the budget timeline so they understand their role in reaching the end point and can limit reiterations. Some companies start planning in Q3 and continue all the way until April of the next year.
Even companies who master a quick start-to-finish process endure three cycles, on average, bust most take far more—up to nine or more iterations. Make sure you let your team know that changes can be made in the discussion sessions, but they need to be limited in order to reach due dates.
2. Engage all leaders for collaborative budgeting
If you’re a department head who pulls together information to create an annual budget, consider collaborative budgeting to engage all owners and stakeholders in the process.
Hold planning meetings that involve strategic leaders to have open discussions about the budgeting decisions being made.
Don’t rely solely on emails to gather the input and data from vertical owners and expect them all to line up with broader goals and projections.
3. Utilize budgeting software
Cloud-based performance management or budgeting software, like Adaptive Insights, is growing in popularity for good reason. Depending on the accounting system you use, budgeting software can cut manual data gathering and consolidation times by 50 percent, relieving a lot of pressure your finance team faces to provide quality data for future forecasting.
Budgeting software leverages automation technology to pull and analyze the financial data you need to prepare departmental budgets. Software automatically builds forecasting models and quickly and easily allows you to share the results and projections to those who hold ownership and control. Budget software makes it easier and quicker for contributors to make edits and manage revisions, enabling the budgeting process to progress at a far faster pace.
4. Evaluate your current processes to identify inefficiencies
When was the last time you audited your business processes?
Do you have legacy processes that should be redesigned? What tasks are essential? What daily tasks are slowing you down from your planning, forecasting and improved business reporting?
If your department is still dependent on data entry and manual labor, such as stamping and stuffing envelopes, it’s likely you’re wasting time and facing inflated costs. By creating more efficient processes – handing much of the work over to automation – you can significantly cut costs and could reallocate those funds toward the purchase of budgeting software that will make quick work of your budgeting process.
You and your staff will also be freed from time-intensive tasks and have faster, easier access to more accurate financial data. That’s an enormous benefit year-round, but it’s especially helpful during forecasting and budgeting time.
You can get started with free tools that help to document the costs associated with your current AP and bill pay processes, including a cost per invoice calculator. Leverage accounts payable and expense reimbursement assessment templates and peer group comparison to help streamline processes, minimize cost, and improve the effectiveness of processing.
Mastering the Budgeting Process
Annual budgeting doesn’t have to be the dreaded process you’ve suffered through in past. With a clear plan, collaborative alignment and the help of innovative technology, creating your 2020 budget will be faster and far more efficient.