AVOID THE HELL OF BUDGETING - NEXT YEAR

It's that time of year. Budget season. The yearly recurring peak load where other tasks must give way to the looming deadline. Every year we promise ourselves that next year will be better. We did that last year as well. And the year before. Next year, however, it may be different. Our experts give their key recommendation.

The road to hell…

The endless email threads with new versions of Excel files, reminder calls on the intranet with appeals to send the final figures, the uncertainty of whether everything is included and the manual updating along the way. Every year, the financial managers toil through the budget season with equal parts frustration and overload in order to get all the necessary budget data from the rest of the organization and consolidate them for the budgets for the next year to be ready on time.

It is a process with many challenges, both rooted in internal work processes but also in the tools we use to handle the task. These are the challenges that must be addressed if we want to make sure that the budgeting for next year does not - once again - shut down the entire finance department.

According to exacto's experts, who advise customers on the optimal handling of budgeting, there is one factor that determines whether you reach your goal.

The experts' recommendation: The right digital setup

One of the fundamental challenges in budgeting is the many versions of Excel files that gradually accumulate. The files are sent crosswise in long email threads or deposited on a shared drive. Each time with a change to the file name – typically verse. 1.2, 2.0, FINAL etc. It is then up to the financial manager to go through the email threads or click through the files on the drive, then contact the person responsible for confirmation that it IS indeed the very final version, and lastly send an email with this version to the person who is to give the final approval.

The way to solve this problem is actually quite simple: Exit the Excel files – enter a database-based setup that creates the optimal conditions for next year's budgeting not to be a hellish experience. 

In bullet form, this includes:

• Change from manually handled Excel files to a digital platform where all users add data directly to the database via individual access, and where everyone can get an overview and insights at any time.
• Integrate the digital platform with the company's ERP so that all master data and actuals are automatically imported from all relevant systems. Design the solution so that it provides simple and flexible access to maintenance of all dimensions, e.g. chart of accounts, employees and cost centres. The optimal way to do this is by integrating with your AIM, so that security and user rights are on a par with the company's other systems.
• Make sure to work through the interdependencies of the various budget parameters: Investigate and establish a clear overview of how the various parameters affect each other and the final result. In connection with this, it is essential that you become clear on which data it is necessary to include. The key to this is: Avoid budgeting that is too general, so that it is not possible to follow up, but at the same time avoid budgeting in more detail than required – e.g. deselect parameters that do not have a significant influence on the budget.

At exacto, the database-based setup is branded as "exacto budgeting".

Additional bonus

If the database-based platform is implemented, you will have come a long way in optimizing the budgeting process. But, as written, there are many advantages to this shift. Here are two of the most important.

BONUS 1: Logging of accesses and inputs for full traceability

By working on a common digital platform that is live, all changes are registered, reflected and visible to all as soon as they are posted. This means that everyone is up-to-date and can react immediately if there are errors. But it also provides access to automated logging of accesses and inputs for full traceability of all changes (goodbye to ver. 1.2, 2.0, final).

BONUS 2: Automation of workflows

The long email threads and requests for latest versions is one thing. Another frustrating element in the preparation of the final budget is that – once you have received the final version – you must have all the approvals in place.

More emails…

You can get rid of this very easily if you switch to the digital platform, where a large number of operations can be automated. This also includes the entire approval process, where notifications are automatically sent to the right person in charge when that person needs to approve, and the process can continue.

In general, the automatic sending of notifications to the relevant employees or departments can be automated. If, for example, a department is behind in delivering their data, an email notification can be sent out with a reminder. You decide how often reminders should be sent. But the need for calls on the intranet and manual sending of reminder emails is a thing of the past.

If you want more knowledge about establishing the optimal digital setup for handling the budgeting process, read about exacto's solution for a better and more streamlined budgeting process here.