Strategies for Accelerating and Enhancing Budgeting Efficiency: Monthly Metric Highlight
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Gear up for the budgeting season! But instead of the typical headaches, frustrations, and delays associated with it, why not tackle your annual budget in just 28 days or less? Leading organizations are making this possible with a modern, collaborative, and technology-driven approach. In this month's feature, we'll share four practices that can help streamline your budgeting process, ensuring a better final product and fewer headaches.
The total number of calendar days, including weekends, from defining budget objectives to delivering a ready-to-use budget is known as the cycle time. Our research, based on data from over 5,000 organizations, reveals that top performers (those in the 25th percentile) can complete the annual budget within 28 days or less, almost twice as fast as those in the 75th percentile.
Tips for a Stress-Free Budgeting Season
To avoid the tedious back-and-forth of prolonged negotiations, consider these practices for a smoother budgeting experience:
1. Collaborative Budgeting
Avoid turning the budgeting process into a battle of finance versus operations or managers versus executives. From the beginning, set expectations for a collaborative process focusing on negotiation, communication, and problem-solving. Remember, people are more likely to support what they help create. By making budgeting a collaborative endeavor, stakeholders will design more realistic targets and be more willing to compromise.
Perry D. Wiggins
2. Train Your Stakeholders
Conduct a pre-budgeting kickoff to prepare all stakeholders, from department heads to team members. Equip them with a clear understanding of the timeline, what a quality budget deliverable looks like, and their expectations at each stage of the process. If you're using a specific software or system, ensure they're trained on how to use it.
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3. Start Later
It may seem counterintuitive, but starting the process later can lead to substantive improvements in cycle times. Observing more of the current year's actual results allows for a more realistic and accurate budget for the next fiscal year, especially in a constantly evolving economic landscape.
4. Leverage Cloud-Based Budgeting Tools
Standardize data and processes by adopting cloud-based budgeting tools. These platforms help prevent multiple versions of the truth, minimize errors, enable real-time updates, and keep everyone aligned on the impact of changes to the budget and inputs made at each level.
Further Reading
- The role of cloud technology in realizing a higher return on invested capital
- Minimizing invoice errors in capital projects
- Boosting efficiency in accounts receivable processing
- Improving sales forecast accuracy
By utilizing collaboration, workflow optimization, and advanced technology, organizations can make budgeting faster, more efficient, and less stressful. Leading finance leaders are leveraging these practices to steer the budgeting process towards a collaborative war council, ensuring a budget that the entire enterprise can rally behind.
Perry D. Wiggins, CPA, is the secretary and treasurer of our research organization, APQC, based in Houston, Texas.
- To optimize the budgeting process, organizations should adopt a collaborative approach that encourages negotiation, communication, and problem-solving, preventing budgeting from being a contentious battle.
- Preparation and training are essential for all stakeholders involved in the budgeting process, including department heads and team members, ensuring they understand the timeline, expectations, and how to use any specific software or systems.
- By starting the budgeting process later, leveraging more actual results from the current year, organizations can create a more realistic and accurate budget for the upcoming fiscal year.
- Employing cloud-based budgeting tools enables standardization of data and processes, preventing multiple versions of the truth, minimizing errors, and providing real-time updates to all parties involved.
- By streamlining the budgeting process through collaboration, workflow optimization, and the use of advanced technology, organizations can reduce cycle times, boost efficiency, and make the budgeting season less stressful, ultimately creating a budget that the entire organization can support.
Additionally, focusing on personal-finance budgeting, implementing these practices can lead to better budgets and fewer headaches for individuals as well, promoting a more manageable financial future.
