5 ways to improve your budget process
Prophix
Jul 17, 2017, 7:00:00 AM
As a finance professional, you know that the best budgets are based on data from across the company’s departments and subsidiaries. Collaboration and insight are two of the most important factors in the budget process. To you, this probably is old news.
Unfortunately, employees from non-finance departments might be unaware of this. Department managers are unsure of why they must spend valuable time in a busy workday to submit data.
As a result, the office of finance is met with delay, hesitation or silence, no data and an unreliable budget.
In this article, we will look at the 5 obstacles that stand in the way of a great collaboration in the budget process - and give you a solution to each of them.
Obstacle 1: The tsunami of data
Each day the amount of data grows. Every product launch, employee, law or process generates its own pile of data. This tsunami of data makes it harder for the office of finance to collect, review and understand the company’s data. At the same time, employees from all corners of the company have a hard time figuring out what information they should submit to the budget, forecasting and planning process. Solution: Support and educate the finance function Since financial data is the heart of every successful organization, the leadership should allocate resources to support the finance function to handle the growing data amount. This means having tools and training available which help the finance function collect data and develop suggestions for action.Obstacle 2: Uncertainly about how to handle data
In ambitious companies, managers ask questions like “When should the data be shared - and how?” or “How do we ensure confidentiality?” It is natural that all parties want to know how to share financial and non-financial knowledge. If this process is unclear or cumbersome, the collaboration slows down. Solution: Knowledge sharing with peers CFOs need to look outside their company and talk to their peers (i.e. CFOs in similar situations) to find ways to improve work methods and data automation. By introducing and mastering such initiatives the finance function creates trust to all parties involved and to the budget process itself.Obstacle 3: Constant changes make data relevant only a short period of time
Let’s face it: being responsible for a set of numbers is always a bit scary. No matter how much effort and time you put into generating them, there’s often still a tiny voice inside your head questioning if the numbers are incomplete or unprecise. The reality is that the world is changing so fast that it is inevitable that some of the numbers will only be relevant for a short period of time. This is why managers can be reluctant to submit and generate data if the company as a whole has not embraced the fact that constantly changing parameters have an effect on data validity. Solution: Be encouraging and constructive You can adjust the culture of the company by encouraging departments to deliver data. You do so by asking constructive questions like the following:- “Do we understand why some of our KPIs are fluctuating?”
- “To what degree do we accept or punish the variation of the numbers we receive from the managers?”
- “Do we provide the finance function with the tools needed to understand the numbers better?”