How to take your company's budget management to new heights

Corporate budgets cut to the heart of the business in more ways than one. For starters, they help managers monitor costs and identify leaks that drain efficiency. Second, they tie directly into the company's bottom lines. A well-crafted and managed budget boosts profits and keeps a company competitive.

Preparing a budget is a tough task at most companies. Thanks to the lack of electronification, budget preparation is marred by delays and companies often lack the insight they need into their spending. However, dealing with budget forecasts doesn't have to be painful.

Here are a few tips that can help ensure your company's budget management flows without a hitch, allowing managers to have the financial insight they need to run a business efficiently.

Define granularity

Every organization is different, and this means the degree of granularity a budget demands is different. Some organizations might be better off tracking expenses and determining budget limits at a department level instead of digging down to the team level.

Much of this decision depends on the culture of the organization. In some cases, tracking expenses at the team level might lead to accusations of micromanagement which will damage employee morale. Balancing business needs with cultural demands is an important task. Budget granularity is a tool that helps managers maintain morale and keep a watchful eye on costs.

Some projects or initiatives might demand greater scrutiny, thanks to their budget allocations. Managers must identify these projects in advance and make sure they're tracking all requisite data points throughout the project's lifetime.

Highly granular budgets can present efficiency opportunities to employees via analytics. For instance, a team or a single employee extending themselves repeatedly on a few unnecessary items is a cause for concern.

Without deep budget tracking, highlighting these instances would be impossible, which makes highly granular budgets a good idea. At the end of the day, a business's managers must decide what works best for the organization and define their budgeting process accordingly.

Delegate and collaborate

In a large organization, crafting a corporate budget can get out of hand. Many departments send their numbers in at different times, and a central finance team can lose track of data. Manually updated spreadsheets only make matters worse, with too many people updating data in a shared file at once.

While collaboration is great, it has to be tempered with processes that ensure data integrity is maintained. Defining and restricting access to shared files to a few users is a good start. Ensuring open communication between these users and defining times when each user will access the document will help maintain data integrity and make audit tracking easy.

It's also a good idea for central finance teams to prepare budget templates and task departmental finance teams to populate them in advance. As data trickles in from each department, teams can update the template.

This is especially helpful during the month-end closing process. Usually, this process is hectic, with data arriving at the last minute and reports to the CFO being delayed due to improper data formatting. Delegating data entry to departments via templates and designing smart collaboration processes will remove many hurdles that currently exist in organizations.

It'll also ensure they have proper financial data to analyze and with which to make business decisions.

Standardize and automate

Technology is becoming more sophisticated by the day. Teams can now automate repetitive processes and shave a significant amount of time off workflow execution. Automation can now help teams source financial data from multiple departments, no matter which format it's in. This ensures optimal efficiency.

For instance, a manual workflow calls for department teams to format and upload data manually. Automated software can now pull these data and populate templated reports, ensuring all data is formatted correctly.

What's more, this software can also update reports dynamically, which means central finance teams can view reports in real-time.

The result is that teams spend more time on value-added work instead of cleaning data and making sure their data pipelines are valid. When presenting these reports to higher-level executives, teams can drill deeper into data and run ad-hoc reports to answer questions better.

Standardization is the key to successful automation. Organizations must define processes that are repeatable and executable in a predictable manner. By automating a small portion of these processes, companies can gradually build more efficiency into their workflows and derive better insights.

Check for updates

Numbers change all the time, and in certain financial reports, such as month-end budget forecasts or year-end analyses, changing numbers can wreak havoc on projections. Finance teams and department heads must constantly check their numbers for validity.

Automating report creation is a great way to build updates into the budgeting process. Even with automation, it's important to revisit budget assumptions to make sure they're still valid.

Adding review notes and reviewing assumptions at specific times will help ensure the business' projections remain valid at all times.