With most of us are wrapping up our second favorite time of year (next to income tax season), we can enjoy a brief lull before the chaos of year-end sets in. What joyous time am I referring to? Budgeting Season of course! Year after year we go through the same process and yet somehow it still seems to sneak up on us, leaving us all scrambling until the very last deadline.
Sound all too familiar to you?
Below is a Cliff’s Notes version of how many firm leaders experience the budgeting process:
- Request (and then wait) for reports from finance for actual versus projectedbudget performance from the previous year
- Begin the tedious process of gathering budget requests from all subordinates
- Draw up a list of major projects for the coming year, with support from subordinate leaders; while creating business cases to support the “why” along with ballpark estimated costs
- Prioritize the project list to determine which are critical and which are just there for negotiating leverage
- Submit proposed budget and supporting documentation then wait, continue waiting and wait some more
- Receive feedback, which includes a series of questions that you don’t have immediate answers to
- Ponder what to do next…
While this may be a bit of an exaggeration, it is not that far from the truth at many of the firms. Budgeting is a painful and largely manual process that requires waiting on numerous other parties and then rapidly executing under strict deadlines. Each department is responsible for its own budget and often submits requests to firm leadership in different formats and structures. To further complicate the process, budgeting data often resides in a number of different repositories, such as: CRM for pipeline, HR for staffing, as well as a series of spreadsheets or homegrown databases to provide expense and third-party spending details.
Given how complex and unpleasant this process can be it begs the question, is there a better way? If so, how can some of the key obstacles in the budgeting process be removed from the equation (e.g. getting the relevant data in a digestible format)? Is there a simplified way for firms to draw on past trends to project budget needs for next year? Can a firm easily identify and track which costs are fixed vs. variable and if variable, by how much each year?
Thankfully the answer to all of these questions is yes. Budgeting is a situation where having the right Spend Management System at your firm can make a world of difference. Here is how:
- Enables real-time budget performance monitoring and reporting throughout the year
- Spurs engagement via self-service interaction with business managers who no longer have to wait for Finance to provide out-of-date reports
- Puts firm leaders in the driver seat; allows leaders to easily access spending details and drill all the way down to the narrative/transaction level detail for their budget
- Provides meaningful baselines for future budget building; eliminates the need to re-invent the wheel each year thus saving time
- Promotes a culture of awareness around budget performance throughout the year
- Significantly improves the firm’s ability to forecast future spending requirements by identifying budgetary outliers and red flags; enables firms to adjust on the fly and plan for seasonal and regional variations in consumption
By implementing the right Spend Management System, firms can simplify and increase the efficiency of their annual budgetary process. At the same time they can empower managers, improve financial transparency and promote a culture of departmental accountability. Who knows? You even might have to find a new favorite way to spend all the extra time it frees up.
To learn more about how SpendConnect can help solve your budgeting challenges, visit us at http://www.spendconnect.com/.