How to Overcome your Biggest Budgeting Challenges and Why it’s Time to Leave Spreadsheets Behind
Few business processes are as crucial as budgeting. Creating a large-scale, company-wide budget is essential, but is also time-consuming and prone to error if you’re using budgeting processes of the past.
If you’re facing numerous challenges each day as you develop your budget, it may be time to reconsider your processes, tools, and techniques. Explore this comprehensive guide on three key topics related to budgeting:
- The many budgeting challenges you may be facing
- Best practices to help you overcome those challenges
- How a corporate performance management (CPM) solution to streamline budgeting processes
Table of Contents
5 Common Budgeting Challenges
Budgeting, while a vitally important aspect of every company’s operations, presents a number of challenges
that can inhibit your productivity and impact your profitability. Here are some of the biggest challenges
companies face when it comes to budgeting.
- Overcoming Entrenched Processes – “But, this is how we’ve always done it.” You’ve likely heard that response any time you’ve tried to update or adjust budgeting processes. There was probably a time when old budgeting processes worked for your business, but it’s also likely that your business needs have grown and developed. Now the processes of the past – typically dependent on spreadsheets – need an overhaul. Change is never easy, and change to an especially vital aspect of your business is sure to be a challenge.
- Inaccurate Data – Data is at the crux of all budgeting process, whether your company is a large enterprise or a small business. One thing that often stands in the way of accurate, streamlined budgeting is inaccurate data. While data errors can have a range of causes, manually moving data from one spreadsheet to another is one of the most common. Using inaccurate data often means work has to be redone, or decisions are made on inaccurate pretenses.
- Time-Consuming Processes – Are you spending so much time on budgeting that you’re neglecting other equally important aspects of your job? Doing and redoing your budget over and over is time-consuming, tedious, and error-prone. When you find a better way to budget, you can reallocate that time on other important endeavors.
- Difficulty Allocating Resources – Allocation of resources is a key component of budgeting. However, without accurate insights into your cash flow or key metrics that impact each department, it can be difficult to ensure funds and resources are being allocated in the appropriate places for the greatest benefit to your company.
- Diminished Productivity –Ultimately, challenges in the budgeting process can equate to diminished productivity, not only within your accounting team, but across your entire organization. When you’re unsure where to allocate resources, different teams may suffer. With an inaccurate view of your budget, it’s easy to overspend. Unpredictable budgeting outcomes complicate decision-making processes. Without uniform and effective budgeting processes, you could experience organization-wide impacts on your productivity.
You may find some of these challenges to be similar to the experience your company is having with your budgeting processes. If so, it may be time to consider leaving old processes, some of which may be dependent on spreadsheets, behind.
Budgeting Best Practices: What Should Your Budgeting Process Look Like?
To overcome the common budgeting challenges listed above, you need to be strategic about your budget creation process. Consider integrating the following best practices into your processes.
1. Outline Your Process
The very first step you should take before you ever begin budgeting is establishing and documenting your budgeting process. A lack of uniformity in a budgeting process can easily lead to challenges down the road. When you skip process establishment, employees often work without focus or direction, and you can easily fall behind. Instead, you should work with your team to identify and define your:
- Key Performance Indicators
With an established process, you can increase uniformity in budgeting, while having repeatable steps saves time and effort in the future.
2. Select the Right Budgeting Solution
When it comes to budgeting, spreadsheets are no longer the best avenue for planning.
Instead you need a solution that can help you manage the complexities of your company’s finances.
Overcoming budgeting challenges starts with establishing a strategic budgeting process centered on
an intuitive, advanced CPM solution. Through features like automation, cloud deployment, and
data integration directly from the source, you can create a superior budgeting process by using a
top CPM solution.
3. Track Your KPIs
Beyond simply outlining your KPIs, you also need to monitor progress in these specific areas.
Tracking KPIs allows you to have a finger on the pulse of your organization. You can gauge
productivity levels, identify areas in which improvements must be made, and utilize previously
untapped potential throughout your organization.
In the past, tracking KPIs was complicated, especially when you were required to collect data manually.
Now, when you’re using an advanced CPM solution, you can access data from a wide variety of sources,
all used to inform your KPIs. For example, you can instantly integrate sales metrics
, using those
numbers to evaluate sales-related KPIs. Instead of ignoring KPIs because data collection was inconvenient,
you can now evaluate performance on a whole new level.
4. Promote Collaboration
Because creating and maintaining a budget can be tedious, complicated, and time-consuming, collaboration isn’t always possible. However, through collaboration, you can streamline the budgeting process and get key stakeholders on board with budgeting decisions.
Creating your budget in a silo reduces the amount of valuable input you can receive from other stakeholders. Each stakeholder has an important role to play. Executives set company goals, managers determine what actions they need to take to meet those goals, and your accounting team allocates resources by creating and maintaining the budget. With buy-in from stakeholders across your organization, budgeting is faster and easier than ever.
5. Establish Your Budgeting Cycle
For some companies, their budgeting and planning cycle can take months. Unfortunately,
by the time the budget is complete, the data probably isn’t relevant anymore. You need
a streamlined, established process that can
reduce the amount of time it takes to create a
budget. Shortening your budget cycle means that the final budget is up-to-date and reflective
of the current state of your business.
A key aspect of these best practices is choosing a CPM solution on which you can rely. If you don’t have a centralized location for all your data, collaboration and accurate planning will always be a challenge.
Transforming Your Budgeting Process: Features to Look for in a CPM Solution
Today, you have numerous options for corporate performance management (CPM) solutions, with capabilities tha
can change the entire way you budget. However, finding the right CPM for your company requires you to first
outline some of the features you need in a solution. Below are some features and goals you should keep in mind as you evaluate your options.
Your CPM should be a solution that holds company-wide benefits. Budgeting is a process that impacts your entire
company, but usually just falls on the shoulders of the accounting department. In reality, budgeting should be
a collaborative effort among the stakeholders in your company. Every department and every decision marker has
an agenda and priorities in the best interest of the parties they represent. To make better decisions and reduce
the amount of time spent on budgeting, your stakeholders need an in-depth understanding of the budget planning
process and they need a voice in how resources are allocated.
How can a CPM solution make your budgeting process more transparent and collaborative? There are a few specific
collaboration enablement features to look for:
- Customizable Dashboards – To better inform stakeholders, customizable dashboards can be created,
showing the data that is most relevant to their interests. Because each decision maker has different
priorities, they’ll be most concerned with data that impacts their needs. By customizing their dashboards, stakeholders have fast access to vital metrics, instead of being required to wade through information that doesn’t really pertain to them. This streamlines the collaboration process, and also improves the quality of collaboration. Stakeholders are better informed and regularly engaged, as they can access updated data at any time.
- Instantaneous Access to Data – In the past, collaboration was inhibited by error-prone, manual data
integration. Dragging and dropping metrics from one spreadsheet to another slowed down any true
collaboration, as spreadsheets often didn’t reflect current or accurate data. Without instant access to data, informed decisions were hard to make. Real-time data access, using metrics integrated directly from the source datasets, allows collaborators to work together, making better decisions based on reliable, precise data. A leading CPM solution like Prophix can integrate easily with other solutions your company uses, like sales solutions or HR software. Your new CPM will house metrics in a centralized location.
- Automated Report Creation and Distribution – Not all stakeholders have the background in accounting
needed to sort through long, complex, detailed spreadsheets. With an advanced and intuitive CPM solution, you can automate report creation, easily sharing it with all interested parties. You can also generate easy-to-understand visual reports, making even the most complex datasets accessible to all interested parties.
Scalable for the Future
Adopting a new CPM solution requires an investment of time and money as you reconfigure all of your budgeting
processes to align with that solution. Before you go through the entire implementation processes, you want to
feel confident that the solution you’re adopting today will be a solution your company will use far into the
Choosing a cloud-based CPM solution is the best way to ensure your solution is scalable to meet future needs.
Whether you face rapid growth or unexpected downsizing, a cloud solution can accommodate any adjustments you
need to make in terms of storage, security, and number of users. With traditional, in-house solutions, growth
meant buying new hardware and investing in new security measures. A cloud solution, however, can be instantly
adjusted based on changes within your company.
Have you recently acquired another company with their own accounting department?
Using a cloud solution means you simply alter your monthly subscription to accommodate for new users,
and then you easily integrate data from the new acquisition. The same principles apply when you need to
downsize. Simply reduce the number of users you need your solution to accommodate. Growth and progress
can happen in an instant. You need a CPM that can keep up with your company’s progress, instead of hindering it.
High Return on Investment
When you’re looking for CPM solutions to help you to improve budgeting within your business, you want to feel
confident the investment you make is a sound one. As mentioned above, choosing a cloud deployment for your
CPM solution reduces the amount of money you must spend on solution hardware. An in-house solution requires
you to spend large amount of money on software, hardware, and support. A cloud solution managed by an outside
provider means you only pay a limited amount, generally just a subscription fee. In comparison with other
options, a cloud CPM yields high returns on a smaller initial investment.
An advanced CPM can also improve data analysis, allowing you to run ‘what-if’ scenarios to inform decisions
that could impact your budget. Evaluating data from different perspectives allows you to make the most profitable
decisions for your business, generating an even higher return on your investment in new budgeting software and
Automation in budgeting processes has the potential to completely transform your day-to-day work responsibilities.
Currently, you may be spending time manually collecting data, analyzing that data, generating reports,
and distributing reports to stakeholders. Automation can drastically reduce the time spent on those tasks and
potentially eliminate some of these steps altogether. You can spend more time analyzing data than collecting
and organizing it.
A CPM solution like Prophix includes a number of automation capabilities to reduce the amount of time you spend of
tedious aspects of budgeting and increase the amount of time spent on applying insights drawn from data analysis
to your business plans.
You can automate data integration directly from the source. With a single click, you can
create intuitive and stunning visual reports. You can even automate report distribution to all applicable
Budgeting doesn’t have to be an inconvenient and unmanageable aspect of your accounting processes.
Instead, using a CPM like Prophix to enable your budgeting processes can unlock new levels of
profitability and enable business growth. Leave your spreadsheets behind and embrace a new way
to budgeting for your business.
Find out more about how a CPM solution can transform your budgeting processes.