5 ways to budget and forecast better

Have you ever found yourself wondering how you can improve your budgeting and forecasting process? Well, you're in luck!

Today, we’ll explore how to budget and forecast better in 2024 and the secrets to navigating budgeting and forecasting challenges with ease. This topic is crucial for financial analysts and CFOs, as budgeting and forecasting plays a significant role in driving business performance.

5 common challenges with budgeting and forecasting today (and how to address them)

Organizations often struggle with budgeting and forecasting because the process is not collaborative, automated, or analytical enough.

Here are other common challenges that organizations have with budgeting and forecasting today.

• Data is housed in too many places – for example, spread across too many platforms, systems, spreadsheets, and documents.
• Too much time is being spent on budgeting and forecasting because processes are manual and data is hard to track.
• Collaboration and getting the broader team involved is too time-consuming and burdensome.
• Your budget lacks flexibility as making changes is a manual, error-prone process.
• The data in your budget is static or fixed, making it difficult to plan for the future.

Do these challenges sound familiar to you?

Luckily, there are ways to address them. Read on to discover our 5 tips on how to budget and forecast better!

5 tips to better budgeting and forecasting in 2024

1. Data housed in too many places? Try establishing a single source of truth!

Are you tired of juggling multiple spreadsheets and platforms when it's time to budget and forecast? Many companies find themselves in this predicament, with data scattered across various systems, such as:

2. Spending too much time budgeting and forecasting? Try automation!

Is budgeting and forecasting eating up too much of your time and resources? In some cases, it can take up to 6 months and consume a whopping 20% of management's valuable time.

Think about it – that's a significant chunk of time spent on a task that simply prepares your company for the next fiscal year.

Addressing this requires automation. A global survey of over 700 finance leaders reported that:

• 27 percent of respondents said half or more of their processes are automated 
• 65 percent of respondents said they plan to automate half or more of their processes by the end of 2023.  
• 11 percent say they plan to be fully automated by the end of 2023.

Automation is another area that can get significant lift with help from technology. By investing in budget and forecast software that enables automation, you can shift your focus to the bigger picture. This way, you can dedicate most of your time to analysis and guiding your leadership team in making strategic decisions.

3. Finding it difficult to involve your team? Try a collaborative approach!

Collaborating with your team is crucial to accurately representing your business requirements, challenges, and objectives. However, collaborative budgeting and forecasting can be complex and time-consuming for everyone involved, especially when done continuously.

One of the biggest challenges is communication. Especially with communications spread across emails, various systems, and meetings, it is crucial to track questions and feedback efficiently. Additionally, you must look out for the bottlenecks that can occur during the review process, as parties wait for each other's feedback, which could lead to multiple meetings before a consensus is reached if not planned for proactively.

Provide feedback and supporting documentation for budget needs.

Adopting budgeting and forecasting software is one way to effectively promote departmental alignment and collaboration. By using a platform that integrates organizational and project management tools, you can streamline the process.

All employees can enter data and view feedback at their convenience, ensuring easier consensus-building. Moreover, having all the input in one central location eliminates the Herculean task of tracking approvals.

4. Does your budget lack flexibility? Prioritize in-depth insights!

If you work in finance, you understand the importance of making well-informed decisions when it comes to budgeting and forecasting. However, manually revising your annual budget in response to significant changes can be a tedious and error-prone process.

That's why establishing a single source of truth, as discussed above, is crucial to transforming your budgeting and forecasting approach. You can create a foundation that prioritizes in-depth insights by:

• Centralizing your data
• Fostering collaboration
• Automating processes

Collaboration and innovation thrive when stakeholders across the organization have access to the same comprehensive data set. With budgeting and forecasting software, you can customize a dashboard to display the metrics that matter most to you, and effortlessly share information with various stakeholders to drive better decision-making.

5. Can’t see far into the future? Try forecasting!

Do you find it difficult to plan for the future? Forecasting might be the missing piece in your quest to improve your budgets. While it may not be directly tied to budgeting, forecasting plays a crucial role in providing insights into your company's long-term financial well-being.

Ask yourself:

• How far ahead can your company look?
• Are you limited to a one-month, three-year, or even a hundred-year view?
• Can you create rolling, multi-year, or driver-based forecasts?

One lookout: If you're relying on Excel as your budgeting and forecasting tool, your forecasts may quickly become outdated. Excel often relies on static or fixed data, making it challenging to capture the forward-looking nature of forecasting.

To overcome this limitation, consider adopting budgeting and forecasting software that offers real-time data updates. With budget software, even the slightest change in your business or market can be reflected in your forecasts. Accurate and up-to-date forecasting provides a clear picture of your company's current and future health, making yearly budgets less critical to your overall success.

You’re ready to budget better

In conclusion, improving your budgeting and forecasting process in 2024 requires a strategic approach to address common challenges. You can make improvements to your budget, including:

• Establish a single source of truth – consolidate data and eliminate duplication to improve accuracy and efficiency.
• Prioritize automation – save time and resources by shifting your focus to analysis with automation.
• Boost collaboration – promote departmental alignment and collaboration, enabling all employees to contribute and view feedback easily.
• Focus on in-depth insights – share key insights with stakeholders across the organization to drive better decision-making.
• Try forecasting - capture the forward-looking nature of your business with real-time data updates.

As you navigate the complexities of budgeting and forecasting in 2024, remember that technology is your ally. By implementing the right tools and strategies, you can revolutionize your budgeting and forecasting process, drive business performance, and make informed decisions that propel your organization towards success.