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July 5, 2013

Avoid Four Common Budgeting Blunders

Posted by Betsy O'Neill

While there are many great tools to help you build a quality budget for your business, the greatest investment that you can make in your budgeting process is your time. With any investment in software or process, it’s important to truly determine what your business needs and not settle for something else.

There are two common scenarios businesses often find themselves in. One, they purchase hardware/software with amazing capabilities but are unsure of how to take full advantage of what the product has to offer. Or, two, companies try to take advantage of all of the features even if they aren’t relevant to their business. The best way to avoid such budgeting blunders is to spend some time evaluating what you really need before purchasing a product.

Here are four areas that are worth the investment of your time:

1)    Analyze your current budgeting process: Before you start looking for a new budgeting solution, take a step back and look at your current situation. What are your current qualms or frustrations with your current budget? Is it really the budgeting tool that is the root of the problems, or is the issue in the process or lack of training? Once you adequately address the issues, create a list with both “must-haves” and “wish list” and set up a plan to tackle the biggest problems before you get to your wish list. 

2)    Invest in training: In some cases, you may already have the tool that you need for creating a solid budget however, you may not have all of the training that you need to effectively and efficiently use it. While having help from an implementer or a software support team can be very useful, understanding more about how the tool works will help you better understand your options and also help you train the rest of your organization.

3)    Get everyone on board: While some of these tools allow one person to create a very precise budget, it may not be very accurate. More detail doesn’t always mean that your budget is better. Get the rest of your organization involved to understand key drivers of revenue and costs, and understand areas for growth or improvement in the day-to-day operations. In order to get involvement and buy-in from the rest of your organization, make sure that you provide your budget managers with the tools and training that they need to participate, as noted above. .

4)    Use your budget: As with any tool, you must use it to see the benefits! You can create a budget, but if you don’t use it to analyze your business, then you may not reap the rewards of going through the budgeting process. Always circle back to the “big picture” and refine your budget by determining what really drives your business and what can be controlled by the leaders in your organization. Ensure your  budget is being used to hold your organization accountable.

While there are many great tools available for budgeting and forecasting your business, the most valuable contribution that you can make to your budget is taking the time to get involved: learn the software, research your needs and find the solution that makes the most sense for your business without over-complicating the budgeting process.

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