Given the time of year your company has either finished or is nearing the end of its budget process. For most it will have been a far from satisfactory experience that would have entailed 4 months worth of game playing, with a lot of time being wasted in handing out, collecting back, and consolidating spreadsheets. Worse still, is that the budget that was finally agreed is unlikely to last more than 3 months, and so many managers in the organisation will be feeling that the exercise was a waste of time. At Financial Driver we are dedicated to turning this inefficient process into one that adds real value to the organization. Although the setting of budgets may be over, it’s still not too late to do something that will ensure the finalised budget achieves its true purpose. Using Financial Driver, here are some things that you can do right now.
Budgets are often set in terms of the resources required to obtain a set of desired outcomes. In reality, the resources expended and results achieved are unlikely to match, as assumptions about the business world when they were set will have moved on. Rather than ignore this, you can
- Load actual data into Financial Driver where it can be used to report where resources and results differ. With Financial Driver you can then communicate to all budget holders their status, but without have to create, load and distribute individual spreadsheets.
- As managers check their results, Financial Driver can be used to collect forecasts from managers as to what they think is most likely to happen over the next rolling 3-month period.
Have you ever wondered why budgets are set in 12 month blocks? It was a process that started back in the early 1900's when the business world didn't change that fast. Today's business environment is very different, where setting fixed budgets for some items 12-15 months out is both unrealistic and a waste of time. Continuous budgeting isn't about conducting the same budget process only more often. It requires a different approach as I'll describe in my next blog.