It happens every year. Fire up the email and spreadsheets, it’s budgeting and planning season. The email leading up to the beginning of the process is sent out and a collective ‘ugh’ runs through your organization. Why? Because despite being a necessary way to set aside money, this annual tradition is inefficient, inflexible, and relatively incoherent.
A Challenge Present Regardless of Size and Industry
Yet it’s a challenge faced by all companies of all sizes, as the effort required to prepare a meaningful, detailed budget is similar for smaller businesses as it is for the larger companies. Often, it’s a process that is completed with too little visibility or control and too much politicization and padding.
Companies’ budgeting processes have evolved—the move away from pay-for-performance has reduced the amount of dishonesty and the push to zero-based budgeting has helped to free companies from the crippling use-it-or-lose-it spending. However, many companies budgeting practices are still considered an exercise in futility. Despite advancements made, many companies still rely on the same mess of meetings, emails, and spreadsheets they used decades ago.
How Technology Makes Budgeting Better
Here’s the thing. It doesn’t have to be like this. Though there are many things needed to address the budgeting challenges faced by companies, one of the most important ways to address this is through the use of technology. Paired with better training of people and improvements to processes, technology can be the difference between a peaceful and tense budgeting season.
Easier Tracking of Budget vs. Actuals
One of the key processes used in zero-based budgeting is that of budget vs. actual analysis. Often part of the background work for many companies, a BVA is the first step to creating a new budget.
The problem, unfortunately, often lies in the tools used to complete this. If your finance staff is trying to cobble together everything in a spreadsheet, you have a problem. However, this is where general ledger technology comes in.
As a starting point, a general ledger System can facilitate the BVA and Budget preparation process, as well as provide accuracy and control of the results. As a minimum starting point, the BVA analysis should identify, for each “item,” the budgeted amount, the actual amount, and the difference.
But the deeper it drills down, the more challenging it becomes. What level of detail is adequate? GL Summary account? Subaccount? Department? Paired with the number of data sources you’re using, this is where it becomes more challenging.
For example, the use of an entry-level accounting system will provide GL access, but when you have to combine this with dozens of other data sources, it’s easy for information to get lost in the shuffle.
A general ledger should reflect the complexity of the organization. Each department and location should flow into the main GL, allowing for an easy way to track and drill down in the budgeting process.
A Single Version of the Truth
Now, once you get into the true process of developing a budget, how are you keeping everyone on the same page? If you said, “more emails and spreadsheets,” you wouldn’t be alone—but where does that get you? The likely answer is, “trying to make sense of a dozen different spreadsheets.” While spreadsheets are initially the simplest option, combining spreadsheets into a single global budget is prone to errors, not to mention tedious and time-consuming.
In order to facilitate the budgeting process, information from across all departments, locations, and entities needs to remain updated in real time. The best way to get this is to rely on a single database that keeps the numbers up to date as they are modified.
Acumatica: Designed for Your Business
If you’re already dreading the budget meetings and budgeting process, know this: it can be easier.
If you’re looking to make your job throughout 2020 and the budgeting process in 2021 easier, get to know about Acumatica. Designed to connect your business, the financial management functionality in Acumatica provides thousands of businesses with a smarter and more efficient budgeting process.
Integrated workflows span the full suite of business management applications, from Financials, Project Accounting, and Inventory Management to CRM. While we may not be able to save you from outdated budgeting process coming to you in the next few weeks, we can get your company up and running quickly with this powerful ERP solution.
Advanced Budgets for Acumatica: Simplify the Process
If you want to make the process even easier, we’ve designed a product within the Acumatica application that can automate the process even more. Advanced Budgets for Acumatica gives you even more control over the process, allowing you to update your budgets in a snap using the native reporting tools in Acumatica. Get to know more about this powerful product here.