Finance professionals could be headed towards one of the most intriguing, educational and exciting experiences in the history of annual business planning and budgeting.
The reasons are numerous: More people are working from home, financial payment processes are changing, corporate strategies are being revised, and resources are being reallocated.
All these dynamics could have a direct impact on how your budget planning and budgeting process unfolds this year and how your company positions itself to succeed.
Allocating funds typically takes a month
But budgeting tends to take plenty of time, as you know. In a typical year finance departments spend at least a month completing the process of helping the business allocate funds for the coming year. The process includes negotiating and securing all necessary buy-ins and approvals. Many companies take even longer.
With the right approach and technologies, these processes can be accelerated. Here are four tips for speeding up your 2021 budget process:
1. SET CLEAR OBJECTIVES AND PRIORITIZE COMMUNICATION
To effectively create a budget that supports your objectives, you need a clear understanding of where your business hopes to be, what outcomes it wants to achieve, how it intends to achieve them and in what time frame.
To support and drive business growth, your finance department can create a budget that establishes your group’s priorities, allocates resources and controls costs.
Assign an owner for the budgeting process
A great place to start creating a goal-oriented and focused budget is by assigning specific ownership of the process to a specific individual in your department. Make sure that person has a plan, involves all necessary contributors and stakeholders, and keeps each person accountable to clear and firm due dates.
The leader should inform the team that changes can be made in discussion sessions as long as they are limited and due dates are met.
Average budget process takes three cycles
The budget process is not a one-and-done deal. Companies that master a quick start-to-finish process endure an average of three budget cycles. But most have to iterate through nine or more.
The budget team leader should inform the team that changes can be made in discussion sessions as long as they are limited and due dates are met.
2. ENGAGE ALL LEADERS FOR COLLABORATIVE BUDGETING
If you’re a department head who gathers information to create an annual budget, consider collaborative budgeting to engage all owners and stakeholders in the process.
In planning meetings with strategic leaders, budget discussions and decisions should be transparent.
3. USE CLOUD-BASED BUDGETING SOFTWARE
A popular tool for budgeting is performance management or budgeting software powered by cloud computing.
Budgeting software cuts manual data and consolidation times by as much as 50 percent
Depending on the accounting system you use, budgeting automation software can cut manual data gathering and consolidation times by 50 percent.
By extracting and analyzing the financial data you need to prepare departmental budgets, the software automatically builds forecasting models and quickly and easily allows you to share results and projections with owners of the data.
Budget software makes it easier and quicker for contributors to edit, make revisions and accelerate the budgeting process.
4. EVALUATE YOUR CURRENT PROCESSES TO IDENTIFY INEFFICIENCIES
It’s crucial to ask these questions: 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 your planning and forecasting reporting?
Automate manual tasks
If your department still depends on data entry and manual labor such as stamping and stuffing envelopes, you’re probably wasting time and increasing costs.
By creating more efficient processes such as shifting much of the work to automation, you will cut costs and could spend that money on budgeting software that accelerates your budgeting process.
You and your staff will also be freed from time-intensive tasks and have quicker and easier access to more accurate financial data.
Starting with free tools
You can begin with free tools that help document costs associated with your current AP and bill pay processes, including a cost per invoice calculator.
You could also leverage accounts payable and expense reimbursement assessment templates and peer group comparison to streamline processes, minimize cost and improve processing effectiveness.
MASTERING THE BUDGETING PROCESS
In this time of profound change, the forthcoming budgeting season will be a great opportunity for your finance department to fine-tune its processes and create a smart and inspirational 2021 budget.
To attain that goal, you will benefit from a clear plan, collaborative teamwork and alignment, and budget automation software.