Lengthy and complex manual workflows coupled with out-of-date reporting means the annual budgeting process is often cumbersome and time-consuming. Here, Dafydd Llewellyn, EMEA General Manager, insightsoftware, explains the benefits of automation and helps to build the business case.
Global organisations work hard to deliver sustainable, profitable growth. Budget planning is an integral part of building this growth – the annual process of compiling, monitoring, and updating a company’s revenue, spending, debt, and capital forecasts.
Unfortunately, budgeting is often a headache for CFOs and treasury teams. They are ultimately responsible for defining goals, bench-marking business performance, and enforcing the budget company-wide. While managers aim to use budgeting to keep the company on track and pinpoint areas of improvement, the reality is that too often it is time-consuming and labour-intensive, while delivering questionable value. Additionally, delays in collecting timely data leads to out-of-date reporting, which makes proper forecasting impossible.
Broadly speaking, these are the top five budgeting challenges facing companies:
- It is time-consuming and costly. The current process often consists of multiple budget contributors working with multiple versions of the same static spreadsheet, and it takes time for managers to coordinate, compile, and consolidate the information. From time spent validating numbers to the lost hours tracking down individual budget contributors, CFOs spend upward of 250 hours (more than six weeks) on the budgeting process alone. Add in the treasury team and those hours add up.
- The process prevents collaboration. There are multiple moving parts before, during, and after the budgeting process. Each stage requires input from budget creators, contributors, and approvers. And they often budget in silos with no alignment among other departments or towards the end goal.
- There is a lack of standardisation. When creating a budgeting document for all managers in a company, it is vital that the form or spreadsheet is standardised and easy to understand. The trouble is that uncontrolled spreadsheets do not allow for the structure and labelling required for all the different budget contributors. As a result, many people get lost in the details and struggle to provide accurate responses.
- Manual processes mean errors. Forced to work with 30 to 100 Excel files (each with many versions), most companies end up relying on manual data entry and processes to piece it all together. With no easy way to track accuracy, manual processes are infamous for resulting in human error, inconsistencies, and a lack of control.
- It’s just too difficult to update. Monitoring and adjusting the budget throughout the year is an efficient business practice that leads to higher returns and improved productivity. Unfortunately, many companies do not make real-time budget adjustments due to technology restrictions, and the manual labour required to merge actuals and budgets.
Many corporates also are unable to realise the value of effective budgeting and fiscal planning, which hinders the ability of operating managers to make informed decisions.
With the right automation tools, CFOs and treasurers see results quicker, improve productivity, and adapt to change much more easily. The solution is a collaborative, integrated, finance-owned budgeting and planning application that is simple and easy to use.
There are three main benefits to this automation-based approach:
- Automation simplifies the budgeting process, so organisations see results quicker. With an intuitive, spreadsheet-like interface, team members can create any type of budgeting, forecasting, or planning form for a robust and cohesive planning process without the need to work with multiple spreadsheets saved on individual computers.Treasurers can create a repeatable, standard planning process that automatically reflects changes in a company’s enterprise resource planning (ERP) system. From there, users can embed analytics to monitor performance and detect trends without relying on IT.
- Automation aligns the team and shortens budget cycles. Save time by taking control of budget entry and approval processes using powerful workflows and automated, coordinated email notifications for all finance team members. There is also an option to comment directly inside planning forms to streamline communication among the team. Remember: sophisticated data access rules and a full audit trail of changes ensures adherence to the governance and compliance needs of the business.
- Automation enables users to continuously monitor and re-forecast on a rolling basis. Automation enables finance professionals to adjust and adapt forecasts continuously. Users login, enter their figures, and the system automatically updates the forecast with a single click. These rolling forecasts drive agility and accuracy across the organisation, while informing strategic business decisions.
The annual budgeting process is never easy, but it can be simplified, more collaborative, and make a positive contribution to the running of any business. And investing in the right automation-driven tools now can create business value further down the line.